6 
3 

9 

7 
7 


^423 


REPORT 


OF  THE 


Special  Revenue  Commission 


TO  THE 


Governor  and  Legislature  of  the 
State  of  New  Mexico 


I 


SANTA  FE,  NEW  MEXICO 
J920 


f.  I.  %%i  m 


I 


THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


^^3G.Z8}ljs^'l 


REPORT 

OF 

THE  NEW  MEXICO  SPECIAL 
REVENUE  COMMISSION 

TO  THE 

GOVERNOR  AND  THE  LEGISLATURE  OF  THE  STATE 

OF  NEW  MEXICO 

Made  in  Accordance  With  Chapter  9, 

Fourth  State  Legislature 

Extra  Session,  1920 


MEMBERS  OF  THE  COMMISSION 

H.  J.  HAGERMAN,  Chairman 

W.  G.  HAYDON, 

JOHN  JOERNS, 

A.  G.  SIMMS, 

W.  W.  RISDON, 

R.  F.  ASPLUND,  Secretary  of  the 
Commissiion, 

CLx\RA  H.  OLSEN,  Executive  Clerk, 

ROBERT  MURRAY  IIAIG,  Ph.  D., 
Special  Counsellor  of  the  Commis- 
sion. 

Santa  Fe,  New  Mexico 
Nove.mher:3»r  1920.  . 


/ 
/ 


Printed  by 

The  Santa  Fe  New  Mexican  Publishing-  Corporation 

Santa  Fe,  New  Mexico 


A  1 

TABLE  OF  CONTENTS. 

Page 

LETTER   OF   TRANSMITTAL   : 5 

CHAPTER  I— Introduction  6-24 

The  present  basis  of  taxation  8 

Necessity  for  a  new  revenue  code  J.0 

The  present  cost  of  government  _ 13 

Increasing  tax  rates 15 

Causes  of  increasing  costs  17 

New  Mexico's  limited  resources  20 

CHAPTER  II — Assessment  Administration 25-32 

Administration  of  assesment  26 

State   tax   commission 27 

Local    assessment 28 

CHAPTER  III— Income  Tax  _ 33-53 

Income  tax  34 

Effect  upon  tax  burden 34 

The  present  statute - 36 

Scope  of  proposed  tax 41 

Reasons  for  personal  income  tax  41 

Personal  exemptions  , 44 

Taxable  income 45 

Date  for  measuring  gains  , 47 

Rates  of  proposed  tax 51 

Probable  yield  of  proposed  tax  50 

Disposition  of  yield 50 

Administration  51 

Exemption  of  intangibles 52 

Repeal  of  1919  income  tax  law  53 

CHAPTER  IV— Mine  Taxation  54-73 

General  policies  ,. 55 

Present  practice  _ 58 

Equity  of  present  mine  tax  _ _ v 62 

The  contiguous  property  clause  „ 63 

Reserves  and  non-producing  mineral  lands 64 

Possible  equity  through  product  tax  66 

Ad  valorem  system  best  solution  68 

Practicability  of  ad  valorem  system 70 

Suspense  fund       _ 71 

Taxation  of  oil  wells -... 72 

Specific  recommendations 72 

CHAPTER  V— State  Administration  74-99 

Governor 75 

Secretary  of  State 78 

Superintendent  of  Insurance 79 

Corporation  Commission  80 

State  Auditor 83 

Treasurer 83 

Traveling  Auditor 85 

Control  of  expenditures  87 

Budget  law ,.... 88 

Financial  Officers  88 


y.'        ^ 


Page 

Game  and  Fish  Warden  ' 89 

Highway  Commission  91 

Health  Department  and  Child  V/elfare 94 

Mounted  Police 97 

Supreme   Court  98 

State  boards  with  own  income ., 98 

CHAPTER  VI— State  Institutions  and  Land  Office 101-127 

Institutional  costs  - 101 

Penitentiary  103 

State    educational    institutions lOT 

State  Land  Office  - 107 

Analysis  status  of  state  lands , 112 

Maintenance  fund  113 

State  colleges  and  schools - 114 

Property  of  institutions  — 118 

Students  - 119 

Distribution  of  students  119 

Unit  cost  of  maintenance  120 

Courses  of  study 120 

Enrollment  of  attendance  120 

Recommendations  as  to  consolidation 121 

The  Spanish  American  Normal 121 

Courses  in  Normal  schools  - 122 

Proposed  constitutional  amendments  ~ 123 

CHAPTER  VII — Assessment — Various  Classes  128-135 

Railroads 129 

Gasoline  tax '■ -131 

State  franchise  tax  133 

Private  car  companies  133 

Express   companies    134 

Banks  - - 134 

Automobiles  135 

Public  utilities  135 

CHAPTER  VIII— Tax  Collections,  etc 1367-167 

Collection  of  taxes  _ ; 137 

Exemptions    , - 142 

County    government    — - ~ 147 

Grand  jury  system  151 

Cities,  towns  and  villages   - — ■- 153 

Drainage  district  taxes  , 154 

Firemen's  volunteer  associations  - 155 

Boundary  suits  - 156 

Untaxable  lands  , 157 

Public  elementary  and  high  schools 160 

CHAPTER  IX— Budget,  Bond  and  Tax  Limitations 168-182 

Local  budgets  _ - 169 

State  budget  - 170 

Administration  of  budget  —- 174 

Tax  limitation  — - ■•■ 176 

Bond  control  — — 178 

CONCLUSION  -. - 182 

Signature  of  members 183 

APPENDICES   -. - - ' 185 


LETTER  OF  TRANSMITTAL. 

November  23,  1920. 
To  His  Excellency, 

The  Governor  of  New  Mexico. 
Sir:— 

We,  the  undersigned  members  of  the  Special  Revenue 
Commission,  appointed  by  the  Governor  of  NeAv  Mexico  under 
the  provisions  of  Chapter  9  of  the  laws  of  the  Special  Session 
of  the  New  Mexico  Legislature  of  1920,  have  the  honor  to 
herewith  present  to  you  our  report. 

Under  the  provisions  of  the  law  the  report  is  to  be  sub- 
mitted before  the  1st  day  of  January,  1921,  and  to  the  Presi- 
dent of  the  Senate  and  Speaker  of  the  House  of  the  next  en- 
suing regular  session  of  the  legislature.  As  soon  as  the  legis- 
lature meets  and  these  officers  are  appointed  we  will  submit 
copies  of  the  report  to  them,  with  such  additional  data  as  may 
seem  wise  to  the  Commission. 

We  have  the  honor  to  be, 

Your  obedient  servants, 

H.  J.  HAGERMAN,  Chairman, 
ALBERT  G.  SIMMS, 
W.  W.  RISDON, 
JOHN  JOERNS, 
WM.  G.  HAYDON. 


CHAPTER  I. 

INTRODUCTION. 

Page 

The  present  basis  of  taxation 8 

Necessity  for  a  new  revenue  and  taxation  code 10 

The  present  cost  of  government 13 

Increasing  tax  rates 15 

Causes  of  increasing  costs  17 

New  Mexico's  limited  resources  20 


CHAPTER  I. 
INTRODUCTION 

This  commission  derives  its  authority  from  Chapter  9 
of  the  laws  of  the  State  of  New  Mexico  passed  at  the  Special 
Session  of  the  Fourth  Legislature  of  the  State  of  New  Mexico 
in  February,  1920.  That  law  provides  for  the  appointment 
by  the  Governor  of  a  commission  of  five  which  commission, 

"shall  have  power  and  authority  to  inquire  into  and  make 
recommendations  as  to  the  policy  or  necessity  of  the 
adoption  by  appropriate  legislation  of  a  system  of  tax- 
ation of  incomes  and  the  relation  of  such  a  system  of 
taxation  to  the  present  system  of  taxation  of  property  in 
New  Mexico  real  and  personal,  tangible  and  intangible, 
the  taxation  of  the  net  income  of  producing  mines  and 
all  other  methods  and  powers  of  taxation  in  force  in  the 
State  of  New  Mexico  or  which  may  be  recommended  for 
adoption  by  the  legislature  of  the  State  of  New  Mexico." 

(Note. — Copy  of  law  printed  in  full  in  Appendix  I.) 

It  is  evident  from  the  wording  of  the  measure  itself  and 
from  the  circumstances  leading  to  its  passage  that  it  was  the 
intention  and  desire  of  the  legislature  that  the  Commission 
make  specific  recommendations  not  only  in  respect  to  the  sep- 
arate subjects  of  the  taxation  of  incomes  and  of  mines  but  in 
regard  to  the  whole  subject  of  taxation  and  revenue  in  its 
effect  "upon  the  state  as  a  whole  and  upon  its  various  political 
subdivisions. 

The  commission  is  strongly  of  the  opinion  and  has  made 
such  fundamental  opinion  the  starting  point  of  its  investiga- 
tions and  the  basis  of  its  findings  that  its  aim  should  be  de- 
wards  simplification  and  co-ordination  and  that  as  far  as  is 
possible,  every  tendency  which  might  result  in  amplification 
or  complexity  should  be  studiously  avoided.  This  principle  to- 
gether with  the  principle  that  its  researches  and  recommenda- 
tions should  constantly  have  in  view  the  equitable  and  fair 
distribution  of  the  tax  burden  are  the  two  controlling  influ- 
ences which  have  dictated  this  report. 

Bearing  these  principles  in  mind  our  first  general  inquiry 
was  as  to  how  far  it  would  be  necessary  or  wise  to  depart 
from  the  theory  of  taxation  as  now  established  in  this  state 
in  order  to  bring  about  the  desired  results. 


8  REPORT  OF  THE  NEW  MEXICO 

THE  PRESENT  BASIS  OF  TAXATION. 

While  New  Mexico  has  on  her  statute  books  various  laws 
which  produce  a  cei-tain  amount  of  revenue  through  taxes 
our  main  source  of  revenue  is  the  general  property  tax.  This 
is  the  basis  of  our  tax  system  as  it  is  that  of  most  states  in 
the  American  Union.  The  only  general  provision  as  to  taxa- 
tion in  the  constitution  of  New  Mexico  is  Section  1  of  Article 
VITT  which  reads  as  follows: 

"Taxes  levied  on  tangible  property  shall  be  in  propor- 
tion to  the-  value  thereof  and  taxes  shall  be  equal  and 
uniform  upon  subjects  of  taxation  of  the  same  class." 

Section  2  of  the  same  article  limits  state  levies  to  four 
mills  exclusive  of  institutional  and  debt  levies  and  to  ten  mills 
for  all  purposes  except  for  the  state  debt.  Sections  three 
and  five,  deal  with  exemptions  and  section  six  provides  that 
large  tracts  of  land  shall  not  be  levied  against  at  lesser  rates 
than  small  tracts.  These  sections  constitute  all  there  is  in  our 
present  constitutiion  about  taxation. 

The  present  Article  VIII  replaces  Article  VIII  of  the 
original  constitution,  and  was  adopted  by  a  vote  of  the  people 
on  November  3rd,  1914.  Sections  1,  2  and  3  of  the  original 
article  read  as  follows: 

Section  1.  The  rates  of  taxation  shall  be  equal  and  uni- 
form upon  all  subjects  of  taxation. 

Section  2.  The  legislature  shall  have  power  to  pro- 
vide for  the  levy  and  collection  of  license,  franchise,  ex- 
cise, income,  collateral  and  direct  inheritance,  legacy  and 
succession  taxes,  and  other  specific  taxes,  including  taxes 
upon  the  product  and  output  of  mines,  oil  lands  and  for- 
ests; but  no  double  taxation  shall  be  permitted. 

Section  3.  The  enumeration  of  subjects  of  taxation  in 
section  two  of  this  article  shall  not  deprive  the  legislature 
of  the  power  to  require  other  subjects  to  be  taxed  in  such 
manner  as  may  be  consistent  with  the  principles  of  tax- 
ation fixed  in  this  constitution. 

What  the  motive  was  in  passing  the  law  amending  these 

very  direct   and  specific  provisions   does  not  appear   clear. 

References  to  that  matter  appear  in  later  sections  of  this 

report  and  in  the  reports  of  the  committee  hearing,  which  have 

been  published  in  a  separate  pamphlet.     It  is  certain  that  if 


SPECIAL  REVENUE  COMMISSION  9 

the  original  constitutional  provision  had  been  allowed  to  stand 
much  subsequent  controversy  would  have  been  avoided  and 
our  present  problems  considerably  simplified. 

The  only  general  provisions  as  regards  taxation  in  our 
laws  is  contained  in  Section  5427  of  the  Compiled  Laws  of 
]9]5  and  Sec.  12,  Chapter  54  of  the  Session  Laws  of  1915, 
which  read  as  follows: 

Sec.  5427.  "All  property,  real  and  personal,  in  this 
state  shall  be  subject  to  taxation,  except  as  in  the  con- 
stitution and  existing  laws  otherwise  provided." 

Sec.  12,  Chapter  54,  Laws  1915.  "All  tangible  property 
shall  be  assessed  and  taxed  upon  its  actual  value." 

These  laws,  and  Sec.  1  of  Article  VIII  of  the  Constitution 
may  therefore  be  said  to  constitute  the  basis  of  our  taxation 
system. 

In  addition  to  the  general  property  tax,  established  by 
these  provisions  (by  which  all  classes  of  property,  tangible 
and  intangible,  are  required  to  be  assessed  at  their  full  value 
and  uniformly  levied  against  to  produce  revenue,)  we  do,  at 
present,  derive  some  tax  revenue  from  capital  stock,  fran- 
chise, inheritance,  gasoline,  poll  and  other  forms  of  taxation 
and  we  have  on  our  statute  books  an  Income  Tax  law  which 
is  inoperative  and  produces  nothing.  All  these  will  be  more 
specifically  referred  to  in  this  report. 

Tlie  Commission,  while  fully  aware  of  the  fact  that  the 
adequacy  of  the  General  Property  Tax  as  an  equitable  basis 
of  taxation  is  open  to  controversy  and  has  been  a  subject  of 
dispute  amongst  economists  for  generations,  are  unanimously 
of  the  opinion  that  it  should  be  retained  as  the  foundation  of 
our  taxing  system  within  this  state.  We  are  of  the  opinion 
because  it  is  apparent  to  us  that  no  other  general  system  ex- 
cept income  taxation  is  possible  as  a  basis  substitute  for  ad 
valorem  taxation  and  we  believe  that  to  abolish  ad  valorem 
taxation  and  attempt  to  substitute  therefor  a  general  system 
of  taxation  of  incomes  would  result  in  confusion  and  failure 
to  raise  the  necessaary  revenue. 

We  are  therefore  directing  our  inquiry  as  to  how  the 
necessary  revenue  to  properly  conduct  the  government  can  be 
produced  Avithout  burdening  the  taxpayers  under  a  system 
which  will  primarily  depend  upon  the  uniform  laying  of  taxes 
against  the  full  value  of  property  within  the  state. 

This  will  not  preclude  our  recommending  the  retention 
of  other  forms  of  taxation  now  in  opei'ation  or  the  inaugura- 
tion of  other  methods  not  yet  practised  if  Ave  are  convinced 
that  they  are  necessary  to  produce  the  required  revenue  or  to 


10  REPORT  OF  THE  NEW  MEXICO 

suppleiiu'iit  and  round  out  the  genei'al  property  tax  at  such 
points  as,  in  our  opinion,  may  be  necessaary  in  order  to  bring 
about  a  fairer  distribution  of  the  tax  burden, 

NECESSITY  FOR  A  NEW  REVENUE  AND 
TAXATION  CODE. 

The  Commission  is  convinced  that  because  of  the  confu- 
sion now  existing  in  our  statutes  in  relation  to  the  subject  of 
assessments,  levies  and  other  features  of  taxation,  that  the 
only  proper  procedure  for  the  legislature  is  the  adoption  of 
a  new  revenue  and  taxation  code.  That  this  should  be  done 
is  evident  to  us  because  of  a, careful  examination  of  the  pres- 
ent laws  conducted  by  members  of  the  Commission's  staff 
and  outside  professional  assistants.  This  we  are  sure  would 
be  necessaary  even  if  no  material  changes  in  the  present  .laws 
were  made,  and  it  will  be  the  more  necessary  if,  as  we  hope, 
various  revisions  in  line  "(vith  the  recommendations  of  this 
commission  are  adopted. ,  We  will  not  attempt  to  point  out  all 
of  the  inconsistencies  and  confusion  now  existing  in  the  laws, 
but  will  cite  certain  of  them. 

Section  5434-5437  of  the  revised  laws  require  that  the 
assessed  value  .of  property  subject  to  taxation  within  the 
counties  shall  be  "one  third  of  the  true  value,  or  one  third 
of  the  actual  value"  and  all  property  was  assessed  on  the 
one-third  basis  in  accordance  with  the  law  during  the  years 
1913  and  1914.  We  are  unable  to  find  any  direct  amendment 
to  the  law  providing  for  one-third  valuation  as  far  as  intangi- 
ble property  is  concerned.  There  is  no  direct  amendment  to 
Chapter  52,  Sec.  5437  except  by  implication.  There  is  in  Sec. 
12,  Chap.  54,  laws  of  1915,  a  direct  change  in  the  assessed 
value  of  tangible  property  which  it  is  provided  shall  be  hence 
forth  assessed  at  its  actual  value.  Under  certain  circtimstances 
intangible  property  is  also  required  to  be  assessed  at  its  full 
value.  Sec.  4,  Chap.  54,  laws  of  1915,  provides  that  "the 
actual  value  of  the  shares  of  the  capital  stock  of  all  banks 
and  trust  companies  incorporated  under  the  laws  of  the  United 
States  or  of ^  this  state"  shall  be  determined  by  the  Tax  Com- 
mission who  shall  certify  "the  actual  value  of  such  property" 
in  each  county  to  the  assessor  thereof.  "The  value  so  certi- 
fied" shall  be  placed  upon  the  assessment  roll  in  the  same 
way^  as  is  the  actual  value  of  railroad  property  and  of  live- 
stock under  the  same  section,  and  all  grazing  lands  under 
Chapter  115,  laws  of  1919. 

The  capital  stock  of  banks  was  formerly  assessad  under 
Section  475  of  tho^code  and  5437  of  the  compiled  laws.  Under 
Section  475  the  chief  officer  of  the  bank  was  required  to  make 
out  a  list  of  all  shares  of  stock,  name  of  owner,  the  value,  and 


SPECIAL  REVENUE  COMMISSION  11 

delivery  to  the  assessor  of^the  county  in  which  his  bank  was 
located.  Inasmuch  as  the  assessor  was  required  to  value  the 
property  for  purposes  of  taxation  at  one-third  actual  cash 
value  thereof  (Sec.  5437)  it  seemed  to  be  clear  that  the  shares 
of  stock  in  banks  like  other  property  were  to  be  assessed  at 
one-third  of  their  value  prior  to  the  passage  of  Chapter  54, 
lawscof  1915. 

FURTHERMORE,  Paragraph  8  of  Chapter  54,  makes  it 
the  duty  of  the  State  Tax  Commission  "to  ascertain  whether 
any  property  subject  to  taxation  in  any  county  has  been  omit- 
ted from  the  assessmen^t  roll,  in^  whole  or  in  part,  or  has  been 
listed  thereon  by  incorrect  or  inadequate  description",  and  in 
such  case  to  certify  the  fact  to  the  county  assessor  "together 
with  a  correct  and  adequate  description  of  such  property ,r  real 
or  personal,  the  number,  quantity,  amount  of  acreage  thereof, 
and  the  name  and  postoffice  address  of  the  owner,  if  known." 
The  assessor  must  put  the  propeily  on  the  assessment  roll  ' '  at 
the  actual  value  of  such  property".  It  is  clear  that  the  drafts- 
man of  this  section  did  not  have  intangible  personal  property 
in  mind,  but  he  has  certainly  included(it  if  it  be  subject  to 
taxation  under  Section  5427.  If,  however,  intangible  person- 
al property  is  to  be  assessed  at  a  third  of  its  true  value,  under 
Section  5437,  if  listed,  and  ati  its  true  value  under  Section  8, 
Chapter  54,  laws  1915,  if  not  listed, — we  would  not  have  "an 
equal  and  uniform  tax"  "upon  subjects  of  taxation  of  the 
same  class. ' ' — Constitution,  Art.  VIII,  Sec.  1 — unless  the  assess- 
nu^nt  at  actual  value  wcs  intended  as  a  penalty. 

This,  however,  cannot  be  argued,  since  the  section  applies 
to  tangible  as  well  as  intangible  property  and  tangible  proper- 
ty discovered  by  the  tax  commission  is  put  upon  the  roll  at 
the  actual  value — the  value  at  which  it  should  have  been 
placed  on  the  roll  by  the  assessor 

Furthermore,  under  Section  12,  Chapter  54,  laws  1915, 
the  maximum  rate  of  tax  to  be  levied  for  all  state,  city,  county, 
town  or  village  purposes  is  fixed  at  a  certain  number  of  mills 
on  the  dollar.  If  intangible  personal  property  were  still  valued 
at  a  third  of  its  true  value,  while  tangible  property  is  valued 
at  its  true  value,  this  section  would  authorize  taxation  three 
times  as  heavy  upon  tangible  as  intangible  property. 

Further  under  the  road  bonds  act,  Chapter  172  of  the 
laws  of  1919,  Section  4  "an  actual  ad  valorem  tax  on  all  prop- 
erty subject  to  taxes  for  state  purposes"  is  levied  sufficient 
to  produce  a  year's  interest  and  the  sinking  fund.  Under 
this  section,  taxes  for  this  purpose  at  any  rate  are  to  be  levied 
on  the  same  basis  of  value  for  intangible  as  well  as  tangible 
property  if  subject  to  tax  for  state  purposes.  This  statute 
of  course  only  applies  to  a  single  levy,  but  it  may  be  argued 


12  REPORT  OF  THE  NEW  MEXICO 

that  it  shows  the  intention  of  the  legislature  to  put  intangible 
on  the  same  basis  as  tangible  property  in  a  case  in  which  it 
might  be  fairly  argued  that  tangible  property  might  fairly  be 
asked  to  bear  a  heavier  burden  than  intangible. 

Furthermore,  Chapter  165  of  the  Laws  of  1919  exempts 
$2,000  "in  actual  value"  of  the  property  of  ex-soldiers.  It 
is  only  possible  to  infer  what  the  legislature  had  in  mind. 

It  is  clear  from  the  foregoing  that  the  legislature  never 
passed  definitely  on  the  question  of  intangibles,  probably  be- 
cause the  taxation  of  intangibles  in  general  was  of  so  little 
importance  that  it  was  not  thought  of.  But  where  an  intan- 
gible, such  as  bank  stock,  was  brought  to  its  attention,  that 
intangible  was  taxed  its  full  value  and  there  is  nothing  to 
show  that  Sees.  8  and  6  of  the  law.  Chap.  54,  Laws  of  1915, 
were  intended  to  apply  only  to  intangible  personal  property. 
If  they  were  intended  to  apply  to  intangibles,  then  the  com- 
mission is  charged  with  the  duty  of  having  the  intangibles 
placed  upon  the  assessment  roll  at  their  actual  value,  just  like 
other  property.  The  argument  could  be  made  that  this  section 
shows  an  intent  on  the  part  of  the  legislature  to  have  the  pre- 
ceding sections  relate  only  to  tangible  property,  except  so  far 
as  the  special  class  of  intangible  property  knoAvn  as  bank  stock 
is  concerned,  which  might  be  singled  out  as  a  class  subject  to 
taxation  under  Article  VIII,  Section  1  of  the  Constitution, 
and  taxed  on  a  higher  valuation  than  other  intangibles.  But 
this  explanation  is  hardly  satisfactoi^y  as  respects  the  fixing 
of  the  tax  limit  and  the  consequent  adjustment  of  existing 
taxation  to  meet  the  new  method  of  assessing  taxes  upon  the 
full  value  "instead  of  at  a  third. 

The  only  basis  found  in  the  law  for  the  practice  of  the 
State  Tax  Commission  in  assuming  that  intangible  property 
should  be  assessed  at  its  full  value  is,  we  believe,  found  in 
Sec.  6,  Chap.  54  of  the  Laws  of  1915,  w^hich  requires  the  State 
Tax  Commission  to  ascertain  the  actual  total  value  of  all  prop- 
erty subject  to  taxation  within  each  county  in  the  state  as 
nearly  as  practicable,  and  to  bring  the  assessment  of  such  prop- 
erty up  to  the  actual  total  value. 

This  will  clearly  indicate  the  present  inadequacy  and  con- 
fusion of  the  laws  as  they  now  stand  on  the  statute  books 
and  the  great  necessity  for  a  codified  revision.  There  are 
many  other  instances  which  may  be  cited.  For  example,  there 
are  at  least  five  different  definitions  in  the  present  statutes 
of  the  basis  upon  Avhich  property  shall  be  valued  for  purposes 
of  taxation. 

The  commission  hopes  to  have  ready  before  the  meeting  of 
the  legislature  a  carefully  prepared  draft  of  a  revenue  and 
taxation   code    comprising   the   present   provisions   and   such 


SPECIAL  REVENUE  COMMISSION  13 

amendments   thereof   as   are   specifically   recommend  in   the 
course  of  this  report. 

THE  PRESENT  COST  OF  GOVERNMENT. 

No  intelligent  diseussiion  as  to  the  best  methods  of  tax- 
ation or  of  general  governmental  revenue  sources  can,  in  our 
opinion,  be  had  without  a  preliminary  and  full  inquiry  as  to 
our  revenue  needs  and  of  the  ability  and  capacity  of  the  state 
and  its  people  to  meet  these  needs.  It  is  quite  out  of  the  ques 
tion  to  properly  consider  how  best  to  get  the  money  to  pay  the 
cost  of  government  until  after  some  conclusion  has  been 
reached  as  to  how  much  money  is  needed  to  carry  on  the 
government  as  it  should  be  carried  on.  This  in  its  furn  in- 
volves a  consideration  of  the  methods  of  administration  best 
suited  to  our  conditions  and  of  the  paying  power  of  the  tax- 
payers and  property  holders  within  the  state.  It  further 
invovles  a  diseussiion  of  the  cost  of  our  governmental  system 
as  now  conducted  and  recommendations  for  its  more  efficient 
conduct  where  such  appear  to  be  called  for  and  further  a  re- 
view of  the  state's  present  and  prospective  resources. 

An  examination  of  the   detailed  statistics  given  in  Ap- 
pendix    XVI     of    this     report     will     show     that     the     cost 
of     the    Territorial    and    State    Governments    for    the    years 
1910  and  1919  was  about  $900,000  and  $4,350,000  respectively. 
This  was  an  increase  of  about  $3,450,000  or  380%.     These 
totals  represent  the  actual  payments  by  the  central  government 
and  include  the  totals  paid  out  through  the  state  treasury  for 
schools,  state  institutions  and  for  investments  in  permanent 
funds,  which  payments  may  properly  be  deducted  from  the 
above  totals  in  figuring  the  actual  cost  of  our  central  govern- 
ment.    After  deducting  such  payments  the  net  cost  of  run- 
ning the  territory  in  1910  was  about  $503,000,  as  against  over 
$2,500,000  for  the  state  in  1919.     This  was  an  increase  of 
about  500%. 

An  examination  of  the  reports  of  the  state  auditor  for 
the  past  ten  years  shows  that  total  payments  through  the  state 
treasurer's  office  grew  from  $901,794.10  in  1910  to  $4,348,- 
381.78,  an  increase  in  the  decade  of  $3,44^.587.68,  or  382%. 
Tf  payments  be  deducted  which  are  included  in  expenditures 
for  schools,  state  institutions  and  for  investments  of  perma- 
nent funds,  we  find  the  increase  in  th  cost  of  state  government 
has  been  from  $503,383.23  to  $2,550,750.00  or  nearly  500%. 
In  the  same  time  the  assessed  value  of  property  in  this  state 
has  increased  110  per  cent  and  the  population  only  ten  per 
cent. 


14  REPORT  OF  THE  NEW  MEXICO 

The  increase  during  the  five  year  period  1915-1919  in 
total  payments,  less  deductions  as  indicated  above,  for  state 
ivovernnient,  has  been  from  $1,458,261.17  to  $2,550,750.50,  or 
75  per  cent. 

The  cost  of  thirteen  state  educational  and  other  institu- 
tions has  increased  from  $688,854.65  in  1915  to  $1,485,343.51 
in  1919,  an  increase  of  115  per  cent. 

The  total  payments  made  by  county  governments  in  the 
five  year  period  1915  to  1919,  have  increased  from  $4,961,336.75 
in  the  former  year  to  $7,792,637.00  in  the  latter,  or  51  per  cent. 
Excluding  payments  to  state  and  town  treasurers,  but  includ- 
ing schools,  the  increase  in  the  same  period  was  from  $3,702,- 
716.45  in  1915  to  $5,370,128.31  in  1919,  or  47  per  cent. 

Accurate  figures  for  expenditures  in  incorporated  cities, 
towns  and  villages  are  not  available.  It  is  known,  however, 
that  $272,787.20  was  the  amount  collected  in  taxes  and  paid 
to  treasurers  of  such  municipalities  in  1915.  In  1919  the 
amount  collected  and  paid  to  such  treasurers  was  $511,777.99. 
From  various  sources  information  has  been  collected  sufficient 
to  warrant  the  estimate  of  $1,144,475.40  for  the  year  1919.  It 
is  probable  that  the  cost  of  government  in  incorporated  cities, 
to\vns  and  villages  has  doubled  in  the  five  year  period  ending 
vrith  1919. 

Consolidating  the  foregoing  we  have  the  following  to  indi- 
cate our  increasing  governmental  expenditures,  eliminating 
duplications  in  the  five  year  period : 

1915  1919  Increase         % 

State  $1,457,261.17     $  2,550,750.50     $1,093,489.33       75 

State  Institu- 
tions      688,854.65        1,485,343.51         796,488.81     115 

Counties  3,702,716.45         5,370,128.31       1,667,411.86       47 

Cities,  towns 
villages  500,000.00         1,144,475.40  644,475.40     122 

Total  - $6,348,832.27    $10,550,697.72    $4,201,865.45      67 

These  increases  in  expenditures  have  had  to  be  met 
by  corresponding  increases  in  revenues  arising  from  fees,  li 
censes,  assessments  and  special  and  genera^  property  taxes. 
By  far  the  greatest  portion  of  such  revenues  are  derived,  of 
course,  from  direct  taxation,  the  increase  having  been  from 
four  millions  and  a  quarter  in  1915  to  nearly  ten  millions  in 
1919.  or  more  than  100  per  cent. 


SPECIAL  REVENUE  COMMISSION  15 

INCREASING  TAX  RATES. 

The  weight  of  taxation  is  most  clearly  indicated  in  the 
direct  tax  levies  upon  general  property,  and  here  too  the  in- 
crease in  governmental  expenditures  is  strikingly  reflected, 
the  state  levy  in  1915  was  $3.95  per  $1,000  of  assessed  valua- 
tion and  in  1919,  $8.75.  (Note  :  This  includes  the  so-called  county 
road  tax  of  three  mills  to  meet  Federal  aid,  the  proceeds  of 
which  are  paid  into  the  state  treasury)  ;  an  increase  of  124 
per  cent.  The  increase  in  state  and  county  levies  combined 
are  indicated  in  the  following  table  of  tax  rates : 

Per-cent 
County  1915         1919        Increase 

Bernalillo- _ $l'4.83  $25.15  70 

Chaves  11.80  21.00  77 

Colfax  10.15  18.95  87 

Curry  11.88  25.85  118 

De  Baca  _...._ 22.42 

Dona  Ana 10.35  22.00  112 

Eddy  15.60  22.20  42 

Grant  _ 9.30  17.84  92 

Guadalupe  _ 11.14  19.99  79 

Hidalgo  

Lea  25.28 

Lincoln  „ 11.50  22.24  100 

Luna 10.85  19.61  81 

McKinley  8.22  19.95  142 

Mora 11.70  20.10  72 

Otero  13.20  24.64  86 

Quay  12.77  25.95  103 

Rio  Arriba  _ _ 12.20  24.23  99 

Roosevelt  _ 11.40  23.15  103 

Sandoval  _ 12.78  17.75  40 

San  Juan  „ 14.83  30.05  103 

San  Miguel  11.85  23.25  97 

Santa  Fe  _ _..... 14.70  23.00  57 

Sierra  11.86  16.67  40 

Socorro  13.12  21.25  62 

Taos  _ 12.38  21.75  77 

Torrance  10.59  21.21  138 

Union  _ 12.75  21.25  66 

Valencia  ... 10.62  17.74  67 

Speaking  in  a  very  general  way  the  foregoing  indicates 
an  increase  in  the  state  and  county  levy  of  from  40  to  142 
per  cent.     If  the  constantly  increasing  near  approach  to  full 


16  REPORT  OF  THE  NEW  MEXICO 

valuation  be  taken  account  of,  it  may  be  said  that  the  state 
ami  (H)uiity  rates  have  been  more  than  doubled  in  the  five 
year  period.  To  the  state  and  county  tax  rate  must  be  added 
the  levies  for  cities,  towns  and  villages  and  the,  special  school 
district  levies.  In  some  of  the  cities,  towns  and  villages  the 
tax  rates  for  all  purposes  approach  and  even  exceed  a  total 
of  four  per  cent  on  approximately  full  valuation. 

If  the  tax  rates  in  the  various  county  seats  be  taken,  in- 
cluding state,  county,  city  and  special  school  districts,  we 
have  a  table  as  follows: 


Cities,  Towns,  etc.  1915 

Albuquerque .,. $21.25 

Roswell  20.80 

Raton  :  21.15 

Clovis .: 16.08 

Ft.  Sumner 11.48 

Las  Cruces  17.35 

Carlsbad  24.35 

Silver  City 

Santa  Rosa 14.69 

Lordsburg 11.80 

Lovington  16.85 

Carrizozo 15.00 

Deming  16.46 

Gallup 15.82 

Mora  ;...._ 11.70 

Alamogordo  20.20 

Tucnmcari 21.45 

Ticrra  Amarilla 12.20 

Portales  • 21.20 

Bernalillo 12.78 

Farmington   •„...  26.95 

Las  Vegas  17.40 

Santa  Fe  _ 22.13 

llillsljoro  11.86 

Socorro   16.37 

Taos  12.38 

Estancia  13.19 

Clayton  18.31 

Los  Lunas 10.62 

The  increase  in  taxation  may  be  further  illustrated  by 
noting  that  in  1915  the  total  amount  of  taxes  levied  for  ail 
purposes  in  the  state  was  $4,299,928.69  and  in  1919  $9,500,- 
000.00  to  which  should  be  added  approximately  $25,000  de- 


Per  cent 

1919 

Increase 

$38.89 

83 

36.00 

73 

32.75 

55 

43.45 

170 

29.00 

153 

31.75 

83 

32.15 

32 

26.94 

83 

22.84 

94 

31.28 

86 

27.44 

90 

27.12 

65 

34.40 

118 

25.20 

116 

44.89 

122 

41.35 

93 

27.25 

123 

46.00 

113 

17.75 

39 

47.71 

78 

30.00 

72 

33.36 

51 

16.67 

40 

37.50 

129 

24.75 

100 

32.03 

143 

43.75 

139 

17.88 

69 

SPECIAL  REVENUE  COMMISSION  17 

rived  in  that  year  from  taxation  of  private  car  companies  and 
$18,120.00  derived  from  the  corporation  franchise  tax. 

CAUSES  OF  INCREASING  COSTS. 

From  what  has  been  shown  there  can  be  no  dou])t  as  to 
the  rapid  increase  in  the  cost  of  government  and  in  the  bur- 
den of  taxation.  Much  of  the  increase,  in  fact  the  greatest 
part  of  the  increase,  is  justified  because  of  the  need  of  better 
roads,  better  schools,  better  health  conditions  and  improved 
governmental  service.  Granting  this  there  are  items  of  ex- 
penditures that  are  not  justified.  AVhile  schools  and  roads  are 
mainly  responsible  for  the  great  recent  advance  in  the  cost 
of  government,  a  careful  analysis  of  the  situation  does  not 
justify  the  conclusion  that  the  greatly  augmented  burden  is 
due  to  these  factors  alone,  nor  can  the  suggestion  that  the 
increased  cost  of  state  government  is  properly  chargeable  in 
any  large  measure  to  the  change  from  a  territorial  to  a  state 
form  of  government  be  maintained.  The  costs  of  educational 
and  highway  facilities  will  be  fully  considered  later  in  this  re- 
port. 

According  to  figures  heretofore  given,  it  has  been  shown 
that  the  total  expenditures  by  the  state,  state  institutions, 
counties  and  cities  were  $6,348,832.27  in  1915,  and  $10,550,- 
697.72  in  1919,  an  increase  of  67  per  cent.  Analyzing  these 
figures  it  is  found  that  for  education  the  expenditures  in 
1915  Avere  $2,016,583.23.  and  in  1919,  $4,015,168.02,  an  increase 
of  100  per  cent.  For  roads  and  bridges  in  1915  the  expendi- 
tures were  $1,078,351.25  and  $1,904,034.48  in  1919,  an  increase 
of  80  per  cent.  Cities,  tovnis  and  villages  spent  $500,000  ap- 
proximately in  1915  and  $1,144,475.40  in  1919,  an  increase  of 
122  per  cent.  The  penitentiary.  Insane  Asylum,  Reform  School 
and  Miner's  Hospital  spent  together  a  total  of  $194,015.38  in 
1915  and  $347,601.86  in  1919,  an  increase  of  78  per  cent.  For 
all  other  purposes  the  expenditures  were  $2,559,882.41  in  1915 
and  $3,139,399.96  in  1919,  an  increase  of  23  per  cent. 

If  the  "other  purposes"  were  still  further  detailed,  it 
is  possible  that  the  increase  Avould  still  be  largely  in  those 
items  which  result  in  some  service  to  the  public  and  that  the 
miscellaneous  governmental  expenditures  Avould  show  a  com- 
paratively low  per  cent  increase.  It  will  be  pointed  out,  how- 
ever, later  in  this  report  that  substantial  saving  can  be  effected 
through  simplification  and  coordination  of  governmental  agen- 
cies and  in  costs  that  do  not  produce  a  commensurate  return 
to  the  tax  payers  of  the  state. 

In  the  foregoing  paragraph  an  attempt  has  been  made  to 
bring  togethei-  all  the  expenditures  made  by  the  state,  the  state 


18  REPORT  OF  THE  NEW  MEXICO 

institutions,  the  counties  and  the  toAvus  and  to  rej^roup  them 
as  to  purposes.  It  will  be  seen  that  educational  costs  consti- 
tute practically  thirty  per  cent  of  the  total  and  highway  costs 
about  15  per  cent  of  the  total  in  1915. 

In  1919  educational  costs  had  risen  to  40  per  cent  and 
highway  costs  to  20  per  cent  of  the  total  costs.  These  are  the 
two  largest  items  of  public  expenditures. 

It  is  probable  that  more  liberal  provision  will  have  to  be 
made  for  public  health  and  sanitation  and  for  various  welfare 
purposes.  The  last  legislature  created  three  departments  to 
bring  about  improvements  along  these  lines.  Still  more  ade- 
quate measures  will  be  required  for  the  care  of  delinquents. 
These  additional  demands  as  well  as  those  for  improved  high 
way  and  educational  facilities  leaid  us  to  stress  this  matter 
of  governmental  costs.  The  more  we  can  by  re-adjustment 
eliminate  waste,  the  more  funds  we  shall  have  available  for 
constructive  and  welfare  measures. 

Even  when  the  utmost  care  is  exercised  in  public  expendi- 
tures, there  will  still  be  need  of  additional  revenue  to  the  end 
that  certain  classes  of  property  shall  not  be  too  heavily  bur- 
dened. 

It  is  for  these  reasons  that  we  recommend  a  better,  more 
efficient  administration,  an  income  tax  to  bring  intangible 
wealth  under  the  burden  of  taxation  and  an  ad  valorem  basis 
for  taxing  the  mineral  wealth  of  the  state. 

As  to  the  increased  costs  to  the  taxpayers  because  of  the 
change  to  statehood  it  may  be  said  that  while  the  amounts 
formerly  paid  the  territory  for  administrative  charges  by  the 
Federal  Government  were  not  large  and  are  now  met  at  home, 
the  increase  in  administrative  costs  due  to  unnecessary  ela- 
boration entailed  by  the  change  are  entirely  out  of  proportion 
to  the  benefits  received.    While  the  change  to  statehood  neces- 
sarily involved   certain  increases  in  governmental   costs   the 
legislative  and  administrative  scheme  devised  was  over  elabo- 
rate and  more  expensive  than  there  was  any  reason  for.    For- 
merly the  Federal  Government  paid  the  Governor,  the  Secre- 
tary of  State  and  some  of  their  office  expenses  and  part  of  the 
courts'  costs  and  the  charges  of  the  biennial  legislatures  up 
to  a  certain  amount.    This  amounted  in  all  to  around  $30,000 
per  annum.  "With  the  advent  of  statehood  the  legislature  was 
fhanged  from  12  to  24  in  the  upper  house  and  from  24  to  49 
in  the  lower  house,  a  change  involving  great  additional  ex- 
pense and  certainly  of  a  doubtful  efficacy,  as  old  , members 
under  the  two  regimes  will  doubtless  agree.    Salaries  all  along 
the     line     have     been     increased     and     new     offices     have 
been  created.     The  wisdom  or  necessity  for  this  expansion  is 
perhaps  not  a  proper  subject  of  comment  in  this  report,  but 


SPECIAL  REVENUE  COMMISSION  19 

we  believe  that  where  curtailment  and  coordination  in  any  de- 
partment is  manifestly  called  for  we  should  make  ^suggestions 
for  such  changes  as  bearing  directly  on  revenue  needs. 

Extravagance,  waste  and  inefficiency  in  government  is 
due  in  a  very  great  measure  to  ignorance  and  ,cupidity  and, 
in  a  lesser  degree,  to  the  exigencies  of  politics.  We  do  not 
believe  that  New  Mexico  is,  on  the  whole,  worse  off  in  these 
respects  than  some  other  states.  We  think,  however,  that  all 
in  all,  our  taxpayers  are  less  able  to  stand  it  than  the  tax- 
payers of  richer  and  more  thickly  populated  states.  With 
great  areas  of  vacant,  untaxed  government  lands,  with  great 
open  ranges,  wealth  producing  to  some  degree  but  tax-free 
because  of  family  exemptions  skillfully  allocated,  with  great 
tracts  of  our  best  lands  in  the  possession  of  the  Indians  who 
pay  nothing  toward  Government  support,  with  so  sadly  in- 
adequate an  administration  of  tax  laws  that  considerable  num- 
bers of  favored  property  holders  regularly  escape  all  or  part 
of  their  fair  share  of  the  burdens  of  taxation,  the  actual  tax 
burden  is  not  equitably  distributed,  and  many  of  those  who 
do  pay  the  taxes  laid  against  them  without  complaint  find 
themselves  at  a  distinct  disadvantage.  They  are  looking  to 
us  to  find  a  cure  and  they, complain  bitterly  when  they  see 
waste,  carelessness  or  inefficiency  in  the  actual  administration 
of  state  and  county  affairs  and  when  they  see  large  sums,  of 
their  money  lost  or  wasted  because  of  incompetent , officials, 
they  object  vigorously  when  they  see  men  repeatedly  put  into 
offices  where  they  handle  public  money  and  important  trusts 
not  because  of  capacity  or  experience  but  merely  on  account 
of  political  expediency.  A  good  many  people  have  come  to 
us  and  asked  us  what  we  were  going  to  do  about  this  phase 
of  the  problem.  "What  is  the  good",  they  say  "of  devising 
means  for  raising  new  revenues  until  you  show  us  that  what 
is  already  raised  is  properly  used.  No  laws  are  of  any  use 
until  you  get  the  right  men  to  administer  them.  What  about 
that?" 

These  are  hard  questions  to  answer.  It  is  hard  to  know 
what  to  suggest  in  response  to  these  well  merited  complaints. 
Anything  more  than  a  very  cursory  survey  of  the  present 
methods  of  governmental  administration  in  the  state  has  been 
quite  out  of  the  question  in  the  time  and  with  the  means  at 
our  disposal.  We  are,  however,  very  fully  convinced  that, 
quite  irrespective  of  the  proper  distribution  of  assessments 
and  the  equitable  enforcement  of  levies,  the  people  have  very 
good  reason  to  complain  of  the  way  in  which  a  good  deal  of 
their  money  is  being  used.  We  are  convinced  that  a  good 
deal  of  it  could  be  saved  if  a  fair  degree  of  efficiency  were 
introduced  into  state  and  county  administration.     We  are  in 


20  REPORT  OF  THE  NEW  MEXICO 

eoini)letc  accord  with  the  opinion,  generally  held,  that,  irre- 
spective of  the  source  of  revenue  supply,  too  much  is  being 
spent  ill  i)roportion  to  the  benefits  received.  Irrespective  of 
the  question  of  benefits  we  believe  that  more  is  being  spent 
than  the  present  wealth  and  resources  of  the  state  justify. 
In  other  words  Ave  believe  that  the  amount  of  money  now 
being  spent  for  governmental  purposes  in  this  state,  even  if 
it  were  properly  distributed,  would  be  a  very  severe  burden 
on  the  taxpayers,  a  greater  burden  than  they  should  be  re- 
quire to  bear.  I'erhaps  this  would  not  be  true  were  the  bur- 
dens of  Federal  taxation  not  so  great.  Federal  taxes  paid 
in  New  IMexieo  amount,  as  shown  elsewhere  in  this  report,  to 
nearly  $2,000,000  a  year.  According  to  the  best  informed 
students  of  the  question  there  is  practically  no  prospect  that 
the  rates  of  Federal  taxation  will  be  reduced  for  many  years. 
AVith  the  great  difficulties  of  curtailing  Federal  expenditures, 
once  inaugurated,  with  our  enormous  war  debt  involving  an 
annual  interest  payment  greater  than  our  total  debt  before  the 
war,  with  the  billions  loaned  to  Europe  and  little  prospect  of 
reimbursement,  with  the  still  hopelessly  unsettled  world  con- 
ditions, with  a  desolated  w^orld  looking  to  us  for  help— those 
who  predict  any  lessening  of  federal  taxes  are  surely  ill 
advised. 

It  is  a  fact  that  vnth  the  tax  burden  distributed  as  it  is 
now  distributed  in  this  state  the  charge  on  some  classes  of 
property  is  so  great  as  to  virtually  amount  to  confiscation. 
In  many  instances  it  is  so  great  as  to  amount  to  positive  dis 
couragement  to  industry  and  initiative  in  lines  upon  which  the 
state's  future  development  must  depend. 

NEW  MEXICO'S  LIMITED  RESOURCES. 

New  Mexico  is  not  a  state  of  great  prospective  resources, 
that  is  to  say,  the  chances  of  any  rapid  development  of  new 
wealth  producing  resources  are  very  remote.  No  program 
involving  rapid  increases  in  public  expenditures  can  be  prop- 
erly predicated  on  any  rapid  increases  in  our  tax  paying  abili- 
ty. The  present  expenditures  and  the  present  rate  of  increase 
in  expenditure  cannot  be  justified.  New  w^ealth  in  this  state 
must  depend  in  a.  very  large  measure  on  the  development  of 
agriculture  and  mines.  That  is  generaly  admitted.  The  graz- 
ing industry  upon  which  so  great  a  share  of  our  prosperity 
depends,  has,  in  the  opinion  of  honest  observers,  reached  its 
limits  and,  in  fact  passed  its  zenith.  Our  ranges  are  already 
over-stocked.  The  grazing  areas  of  natural  grasses  in  the 
state  still  available  in  public  and  private  ownership  are,  on 
the  whole,  not  more  than  two-thirds  as  good  as  they  were  fifty 


SPECIAL  REVENUE  COMMISSION  21 

years  ago.  While  it  is  true  that  over-stocked  ranges  may  in 
time  recover,  if  given  absolute  rest  for  a  long  series  of  years, 
such  recovery  is  actually  very  slow  and,  in  fact,  except  in 
certain  privately  owned  ranges  little  chance  for  recovery  is 
afforded.  Outside  of  the  National  Forests  there  is  no  control 
of  the  open  ranges.  Wherever  there  is  free  grazing  the  range 
is  used  to  the  limit  irrespective  of  grass  conservation,  when- 
ever water  conditions  permit.  The  net  result  of  these  con- 
ditions is  that  the  greatest  wealth  producing  asset  of  the 
state,  the  asset  upon  which,  above  all  others  the  business  wel- 
fare of  our  people  depends  has  deteriorated.  Range  preserva- 
tion can  on  the  whole  be  properly  effected  only  through  private 
ownership  or  public  control.  Public  control  on  a  large  scale 
has  not  yet  been  made  practicable.  Private  ownership  of  a 
good  many  large  tracts  has  been  perfected  in  recent  years 
but  high  taxes  against  such  privately  owned  tracts  does  not 
encourage  such  ownership. 

Great  advances  have  during  the  past  twenty-five  years 
been  made  in  irrigation  farming  in  this  state.  Practically 
all  the  water  in  the  state  available  for  irrigatiion  purposes 
has  been  appropriated.  No  great  and  sudden  increase  in  the 
area  of  irrigated  farms  or  in  the  wealth  producing  power  of 
the  lands  now  available  for  irrigation  can  be  looked  for.  In- 
tensive farming  and  improved  methods  are  gradually  increas- 
ing the  efficiency  of  the  , lands  now  reached  by  irrigation 
but  in  some  of  our  principal  irrigated  districts  this  improve- 
ment is  certain  to  be  but  slow.  We  have  a  great  many  ad- 
verse conditions  to  contend  with  in  connection  with  making 
the  best  use  of  our  irrigable  areas.  To  make  the  best  use  of 
them  requires  large  initial  expenditure  and  continued  large 
maintenance  cost.  It  requires  scientific  farming  on^the  most 
approved  scales.  It  requires  the  most  progressive  and 
energetic  men,  great  patience,  hard  work  and  persistence. 
Sooner  or  later  it  requires  drainage  at  great  cost.  The  Rio 
Grande  ,Valley,  the  oldest  irrigated  district  in  the  United 
States,  is  now  greatly  impaired  because  of  the  lack  of  proper 
drainage.  The  Rio  Grande  river  bed  has  gradually  risen  with 
deposited  silts  so  that  the  adjacent  farm  lands  are  subject 
to  periodic  overflows  and  the  general  water  table  constantly 
rising.  Old  established  ditch  systems  and  numerous  areas  of 
Indian  lands  make  a  proper  solution  of  the  drainage  problem 
exceedingly  difficult.  Many  areas  once  highly  productive  are 
now  practically  swamps.  The  valley  as  a  whole  and  the 
water  appropriated  for  and  available  for  its  irrigation  are 
not  producing  one-tenth  the  wealth  in  agricultural  produce 
they  should  produce  if  they  were  used  to  their  greatest  eco- 


22  REPORT  OF  THE  NEW  MEXICO 

nomic  capacity.  It  will  cost  millions  in  money  and  many  years 
of  work  to  bring  this  valley  to  the  economic  condition  it  is 
capable  of.  Great  sums  will  have  to  be  obtained  to  bring 
about  this  condition  and  in  the  meantime  the  tax-paying  abili- 
ty of  the  Rio  Grande  district  as  a  whole  will  but  very  slowly 
increase.  And  this  is  one  of  the  two  great  irrigated  districts 
of  the  state. 

The  other  is  the  Pecos  Valley.  The  Pecos  river  and  its 
trilnitaries  in  New  Mexico  are,  we  believe,  actually  irrigating 
not  more  than  fifty  thousand  acres  of  land.  All  the  water 
has  been  appropriated  and  the  Government  has  brought  a 
suit  to  confirm  the  Government  appropriations  under  the  Carls- 
bad Project.  It  is  not  probable  that  over  150,000  acres  of  land 
will  ever  be  brought  under  effective  irrigation  from  the 
Pecos  river  system  in  the  state.  That  is  the  extreme  and  many 
years  will  be  required  to  do  that.  Cotton  raising  in  the  Carls 
bad  project  and  other  lower  Pecos  Valley  points  seems  to  be  a 
success  and  if  a  large  area  can  be  made  to  successfully  grow 
long  staple  cotton  an  appreciable  increase  in  asssessed  valua- 
tions of  farm  lands  should  be  looked  for  in  that  vicinity. 

A  similar  increase  in  land  values  due  to  a  like  cause  should 
occur  in  the  Mesilla  Valley.  On  the  whole,  however,  as  clearly 
pointed  out  in  the  evidence  of  the  President  of  the  State  Farm 
Bureaus  in  the  committee  hearings  (Note:  See  testimony  of 
Major  R.  C.  Reid)  agricultural  lands  in  the  state  are  taxed  to 
the  full  capacity  already  and  the  increase  in  their  total  as- 
sessed value  must  be  very  gradual. 

There  are  other  irrigated  spots  in  New  Mexico  besides 
those  watered  by  the  Rio  Grande  and  the  Pecos  and  their 
tributaries — mostly  in  San  Juan  and  Colfax  counties — but 
Iheir  aggregate  acreage  is  comparatively  small.  Unless  there 
is  an  entire  reversal  in  the  order  of  nature  it  is  not  probable 
that  in  the  next  hundred  years  a  total  of  more  than  a  milliion 
acres  of  New  Mexico's  78,000,000  acres  of  land  vn\]  be  brought 
under  continuo-us  and  successful  cultivation.  This  is  not  a 
pessimistic  forecast.  It  is  based  on  thirty  years  close  obser- 
vation during  a  period  in  which  two  great  government  irriga- 
tion projects  have  been  installed  and  on  a  retrospect  over 
hundreds  of  years  of  the  history  of  the  oldest  settled  portion 
of  the  United  States. 

Perhaps  a  very  considerable  increase  in  the  aggregate  of 
taxable  values  in  the  state  will  be  ultimately  brought  about 
by  success  in  dry  farming.  We  already  hear  much  of  that  in 
connection  whh  Torrance  and  Curry  and  other  counties.  We 
know  that  highly  encouraging  results  have  in  places  been  ob- 
tained occasionally  without  irrigation  in  recent  years.     An 


SPECIAL  REVENUE  COMMISSION  23 

honest  analysis  of  that  situation  will,  however,  clearly  dem- 
onstrate that  the  whole  subject  of  dry  farming  in  tliis  com- 
munity is  still  in  an  experimental  stage,  that  nowhere  near 
enough  has,  as  yet,  been  demonstrated  in  that  respect,  to  war- 
rant the  statement  that  dry  farming  is  a  success.  An  honest 
analysis  of  the  situation  will  show  that  hundreds  of  homesteads 
and  desert  entrymen,  sincerely  believeing  they  could  raise 
crops  without  irrigation,  have  abandoned  their  farms  after 
valiant  and  ineffectual  attempts  to  do  so.  A  frank  examina- 
tion of  statistics  will  show  that  dry  and  wet  seasons  in  seven 
year  cycles  are  the  established  course  of  nature  in  this  country 
and  that  one  or  two  years  out  of  the  seven  will  in  all  probabili- 
ty generally  prove  wet  enough  to  raise  certain  fairly  good 
crops  mthout  the  aid  of  irrigation— and  not  more  than  that. 
(Note:  See  page  141  Committee  hearings.) 

No  sudden  access  of  taxable  wealth  is  to  be  looked  for 
because  of  dry  farming.  As  to  the  development  of  her  mineral 
resources  New  Mexico  has  also  been  notoriously  slow.  No 
section  of  the  United  States  was  so  early  explored  for  precious 
minerals  as  what  now  constitutes  New  Mexico.  It  is  safe  to 
say  that  there  is  hardly  a  deposit  of  silver,  gold,  copper  or 
lead  in  the  state  that  was  not  kno■^^^l  to  the  old  Spanish 
pioneers.  But  in  spite  of  this  earlier  original  discovery  of 
these  ore-bearing  districts  their  development  has  been  ex- 
ceedingly slow  and  the  total  number  of  profitable  mines  in  this 
state  is  now  comparatively  small,  very  small  compared  with 
our  neighboring  states  of  Arizona  and  Colorado.  This  has 
been  the  subject  of  special  comment  among  mining  men  for 
many  years.  The  recent  development  of  the  low  grade  copper 
porphyries  in  Grant  county  and  the  prospect  that  there  may 
be  similar  deposits  in  Sandoval  county  and  elsewhere  has 
adde-d  a  new  zest  to  mining  development  in  the  state  and 
served  to  overcome  much  of  the  pall  which  seems  to  have 
hung  over  New  Mexico's  mining  industry.  In  the  Mogollons, 
the  Ortiz,  the  Glorieta  and  elsewhere,  old  mines  seem  to  be 
taking  on  a  new  lease  of  life  and  there  is  reason  to  believe 
that  from  a  raining  viewpoint  New  Mexico  may,  at  last,  be 
coming  into  her  ovra.  The  subject  will  be  more  fully  dealt 
with  elsewhere  in  this  report;  suffice  it  to  say  here  that  from 
a  tax  producing  standpoint  mines  have,  so  far,  produced  but 
little  compared  with  railroads,  live-stock  interests  and  lands. 

The  suggestion  has  been  made  that  the  slow  development 
of  mining  in  this  state  may  be  due  to  the  lack  of  proper  op- 
portunity being  given  to  outside  investors  to  know  of  our 
prospects  and  mineral  resources,  a  lack  that  might  be  sup- 
plied by  a  properly  equipped  publicity  bureau  of  mines.  This 
suggestion  may  perhaps  merit  the  attention  of  the  legislature. 


24  REPORT  OF  THE  NEW  MEXICO 

Tlu'i-c  arc  undoubtedly  very  great  untouched  deposits  of 
coal  ill  \arious  parts  of  the  state  and  perhaps  large  deposits 
of  iron  ore  in  eastern  Socorro  county  and  elsewhere,  but  these 
cannot  be  counted  upon  as  tax  producers  until  they  ure  de- 
veloped or  unless  their  actual  value  has  in  some  way  been 
demonstrated  so  as  to  make  them  proper  subjects  for  taxation. 
Until  such  time  comes  they  Avill  actually  be  latent  resources. 

The  railroads,  as  is  well  knoAvn,  are  the  greatest  revenue 
producers  in  the  state.  Over  a  hundred  million  of  the  total  of 
380.000.000  dollars  of  assessed  values  in  New  Mexico  arises 
from  the  railroads.  They  pay  more  than  10/38  of  the  taxes, 
as  they  pay  all  the  levies  made  against  them  whereas  the 
average  payment  in  the  state  is  around  90%.  These  railroads 
to  which  is  due  so  large  a  share  of  our  governmental  revenues 
are  mostly  transcontinental  lines  passing  through  this  state. 
The  anu)unt  of  their  business  originating  here  is  comparatively 
small.  It  is  quite  out  of  the  range  of  probabilities  that  there 
will  be  any  material  increase  in  railway  construction  within 
the  state  for  many  years.  Some  short  lines  may  be  built  but 
since  the  value  has  dropped  out  of  the  best  railways  securities, 
funds  for  new  construction  will  certainly  not  be  easily  avail- 
able. There  is  nothing  to  indicate  that  there^  will  be  any 
material  increase  in  assessed  values  in  this  state  from  railways 
for  many  years.  On  the  contrary,  it  is  more  than  likely  that 
railway  assessed  valuation  will  decrease. 

About  the  only  possible  source  of  brand-new  revenue  for 
government,  not  touched  upon,  is,  we  think,  new  oil  discov- 
eries. So  far  there  have  been  no  pay  oil  discoveries  and  until 
there  is,  that  cannot  be  counted  upon  as  a  ^new  source  of 
revenue. 

This  resume  of  the  situation  as  to  existing  conditions  will, 
Ave  believe,  demonstrate  that  ^ any  budget  program  based  upon 
a  material  and  regular  increase  in  the  value  of  tax  paying 
property  in  the  state,  is  quite  unwarranted  and  unsound. 

(Note :    See  also  Appendices  XVII,  XVIII,  XXXTII.) 


CHAPTER  II. 

ADMINISTRATION. 

Page 

Administration 26 

State  Tax  Commission 27 

Local  Assessment  28 


26  REPORT  OF  THE  NEW  MEXICO 

CHAPTER  II. 
ADMINISTRATION. 

At  the  voi-y  beginning  we  wish  to  record  our  conviction 
that  the  trouble  with  taxation  in  this  state  lies  not  so  much 
in  shortcomings  of  the  tax  system  as  in  the  inadequacy  of  the 
administration.  In  spite  of  material  advancement  brought 
about  since  the  establishment  of  the  state  tax  commission, 
assessments  are  still  inaccurate  and  incomplete.  This  is  a  matter 
of  such  common  knowledge  that  we  do  not  deem  it  necessary  to 
attempt  to  demonstrate  it.  The  witnesses  who  appeared  be- 
fore us  were  unanimous  in  their  testimony  that  the  system  of 
locally  elected  county  assessors  had  broken  doAvn;  that  the 
assessors  were  ordinarily  chosen  for  considerations  quite  apart 
from  their  technical  qualifications  or  efficiency;  and  that,  in 
short,  the  office  had  become  a  political  football.  Although 
there  are  occasional  officials  who  are  both  able  >and  indus- 
trious, the  great  majority  appear  to  be  either  inefficient  or 
negligent,  or  both.  One  case  Avas  cited  of  an  assessor  who  had 
been  out  of  his  county  for  nearly  a  year.  The  actual  assess- 
ment is  often  delegated  to  a  deputy,  paid  by  the  county,  and 
the  work  usually  consists  of  the  mere  mechanical  copying  of 
the  roll  of  the  previous  year.  The  assessors  are  often  without 
aids  to  assessment  such  as  maps  and  charts.  No  provision  is 
made  for  the  expenses  of  field  work  and  consequently,  even  in 
the  case  of  real  estate,  the  assessor  does  not  ordinarily  view 
the  property  personally  in  order  to  arrive  at  a  valuation  for 
tax  purposes. 

Under  the  statute  which  forbids  holding  office  for  more 
than  two  consecutive  terms,  there  is  no  possibility  that  the 
position  will  come  to  be  regarded  as  a  professional  one  in 
which  rewards  will  be  apportioned  according  to  ability,  at- 
tainment and  faithful  service.  The  offices  are  i^olitical  spoils 
and  the  assessment  functions  have  degenerated  to  a  point 
where  they  consist  of  the  mechanical,  unquestioned  acceptance 
of  almost  any  return  which  the  taxpayer  may  be  disposed  to 
render. 

It  is  both  futile  and  foolish  to  demand  high-sounding  re- 
forms in  our  revenue  system,  to  babble  about  the  equity  of 
the  distribution  of  the  tax  burden,  to  establish  complicated 
and  finely-spun  measures  like  the  income  tax,  and  to  insist 
upon  a  full  and  accurate  assessment  of  property  as  difficult 
to  value  as  mines  and  coal  reserves,  unless  the  people  of  this 
state  are  enough  in  earnest  to  pay  the  price  of  good  adminis- 
tration. Xo  substantial,  permanent  progress  can  be  made  until 
we  are  A\dlling  to  face  squarely  this  fundamental  problem. 
There  is  room  for  differences  of  opinion  as  to  what  type  of 
organization  is  best  adapted  to  accomplish  the  work,  but  there 


SPEK!IAL  REVENUE  COMMISSION  27 

is  no  question  at  all  about  the  inadequacy  of  the  present  or- 
ganization. Our  only  road  to  tax  reform  is  one  which  leads 
away  from,  the  conception  of  tax  administrator  as  a  political 
office-holder  and  approaches  the  conception  of  the  adminis- 
trator as  a  professional  technician  whose  prosperity  and  well 
being  depends  entirely  upon  his  skill,  impartiality  and  in- 
dustry. 

When  this  commission  first  began  to  consider  this  problem, 
it  was  with  the  earnest  hope  that  we  could  recommend  some 
moderate  measure  which  would  not  involve  radical  changes  in 
the  existing  organization,  for  we  fully  realized  that  a  proposal 
involving  radical  changes  would  be  certain  to  arouse  antago- 
nism which  might  prejudice  our  entire  program.  Our  aim  in 
this  report  is  not  to  paint  a  picture  of  an  economic  heaven.  On 
the  contrary,  we  are  determined  to  suggest  nothing  which  is 
not  clearly  feasible,  and  capable  of  immediate  realization.  Our 
search  for  a  moderate  remedy  of  our  administrative  difficul- 
ties, however,  has  been  fruitless.  In  this  case  we  are  con- 
vinced that  the  only  feasible  course  is  a  bold  course.  Every 
one  of  our  tax  proposals  stakes  its  chances  for  success  upon 
the  possibility  of  securing  good  administration.  "We  have 
modified  and  adapted  our  recommendations  so  as  to  make 
them  as  simple  as  possible  from  an  administrative  viewpoint, 
but,  even  then,  the  legislature  would  be  wise  to  discard  the 
whole  report  unless  it  can  see  its  way  clear  to  take  the  neces- 
sary steps  to  build  up  an  efficient  administrative  force.  In 
our  minds  the  issue  is  clear.  If  the  demand  for  tax  reform 
is  sincere,  the  issue  will  be  frankly  met.  If  it  is  not  sincere, 
it  will  be  evaded.  Unless  the  people  are  willing  to  demand 
that  the  legislature  take  the  necessary  steps  to  reorganize  the 
machinery  of  assessment,  they  must  cease  to  complain  about 
the  corporations  escaping  taxes  and  the  inequality  of  the  tax 
burden. 

STATE  TAX  COMMISSION. 

In  our  opinion  the  State  Tax  Commission  has  fuUy  justi- 
fied its  existence.  It  was  first  established  in  1915  (1)  and 
its  position  was  strenghtened  in  1919  (2).  Its  work  has  given 
general  satisfaction,  and  such  improvements  as  have  developed 
in  property  assessments  arc  directly  traceal)le  to  its^activitios. 
Further  progress  is  to  be  sotight  in  materially  strenghtening 
the  resources  and  powers  of  this  commission.  Our  suggestions 
for  changes  in  the  tax  laws  will  result  in  increasing  the  duties 

(1)  Laws  of  1915,  Chap.  54. 

(2)  Laws  of  1919,  Chap.  115. 


28  REPORT  OF  THE  NEW  MEXICO 

of  this  commission  to  an  extent  which  will  justify  the  appoint- 
ment of  tliree  men  on  a  full-time  basis  in  place  of  the  present 
arrangement  which, consists  of  one  i'ull-time  and  two  part-time 
commissioners.  Not  only  the  quantity  of  the  work  to  be  done 
but  its  nature  as  well  makes  the  three-member  type  of  com- 
mission a  desirable  one.  Many  of  the  questions  which  the 
commission  ,will  be  called  upon  to  solve,  should  our  recom- 
mendations be  adopted,  will  demand  deliberation  and  judg- 
ment of  a  type  where  a  decision  of  three  will  give  much  better 
satisfaction  than  a  decision  of  one  man. 

The  salary  ,now  paid  the  full  time  commissioner  is  in- 
adequate. We  recommend  that  each  of  the  three  members  of 
the  proposed  commission  be  paid  an  adequate  salary. 

The  chairmanship  of  the  commission  should  carry  no  addi- 
tional compensation.  There  should,  ,of  course,  be  a  chairman 
who  should  be  vested  with  responsibility  for  initiating  action 
but  he  should  be  designated  by  the  commissioners  themselves 
from  their  own.  number,  the  governor  being  given  power  to 
designate  in  case  of  inability  of  the  commissioners  to  agree. 

It  is  undesirable  to  establish  any  fixed  rule  of  rotation. 

The  term  should  be  six  years,  one  term  expiring  every 
two  years,  and  incumbents  should  be  eligible  to  reappointmej^t. 

Commissioners  should  be  removable  by  the  governor  only 
on  grounds  of  established  inefficiency  or  dishonesty. 

The  addition  of  the  two  full-time  commissioners  together 
with  the  establishment  of  the  force  of  district  supervisors  of 
assessment  recommended  in  the  following  section  (page  29) 
should  make  the  present  force  of  field  agents  superfluous 
it  would  be  expected  that  the  tax  commissioners  themselves 
would  travel  about  the  state  to  an  extent  which  will  render 
it  possible  to  familiarize  themselves  with  conditions  in  differ- 
ent sections  and  for  the  purpose  of  hearing  appeals  and  com- 
plaints. Necessary  traveling  expenses  should  be  provided  for 
this  purpose. 

The  tax  commission  should  be  the  keystone  of  the  ad- 
ministrative arch.  As  will  appear  from  our  detailed  recom- 
mendations, the  ultimate  power  for  finally  determining  as- 
sessments of  all  types  should  rest  with  them,  subject,  of  course, 
to  review  by  the  coYirts.  They  should  have  full  authority  to 
make  adjustments  on  appeal  as  Avell  as  power  on  their  own 
initiative  to  correct  individual  assessments,  to  make  blanket 
increases  or  decreases  or  to  demand  re-assessments  in  counties 
or  subdivisions  thereof. 

LOCAL  ASSESSMENT. 

In  our  search  for  a  type  of  assessment  organization  which 
is  adapted  to  the  peculiar  economic  and  political  conditions 


SPECIAL  REVENUE  COMMISSION  29 

Avhicli  obtain  in  this  state,  we  have  considered  various  systems 
in  use  in  other  states  and  in  other  countries.  We  have  been 
particularly  interested  in  the  Wisconsin  plan  of  elected  county 
assessors  supervised  by  a  force  of  state  assessors,  who  are 
permanent  civil-service  officials,  and  in  the  plan  under  which 
the  assessors  are  not  elected  but  are  appointed  by  the  coUnty 
commissioners.  Neither  of  these  plans,  however,  appears  to 
us  to  be  entirely  suited  to  our  local  situation.  Here  the  locally- 
elected  county  assessor  stands  condemned  by  his  record  and 
there  is  no  rational  foundation  for  the  hope  that  the  appoin- 
tees of  our  county  commissioners  would  be  able  materially  to 
improve  that  record.  The  assessment  problems  here  are  es- 
sentially different  from  those  in  some  of  the  states  Avhere  the 
locally-elected  assessor  has  found  favor.  Our  immense  dis- 
tances, our  sparse  population,  and  the  economic  differences 
Avhich  exisist  between  sections  of  the  state,  all  combine  to 
form  an  assessment  problem  which  can  be  satisfactorily  solved 
only  through  disinterested  central  control.  Consequently  we 
are  reluctantly  forced  to  advance  an  iconoclastic  suggestion. 
We  recommend  that  the  entire  assessment  procedHire  be  cen- 
tralized and  professionalized.  We  have  found  no  other  solu- 
tion which  we  can  commend  with  confidence. 

At  the  head  of  this  centralized  system  should  be  the  state 
tax  commission,  reorganized  and  strenghtened  in  accordance 
with  the  suggestions  outlined  above.  This  commission  should 
be  flatly  charged  Mdth  the  responsibility  of  securing  a  com- 
plete, uniform  and  accurate  assessment  of  all  property  and 
personal  incomes  within  the  state.  It  should  assess  directly 
certain  types  of  property,  such  as  the  public  utilities,  both 
local  and  state-wide,  and  the  mines.  It  should  supervise  and 
control  the  assessment  of  other  property  and  of  incomes  by 
an  organization  of  district  and  local  assessors  appointed  by 
them  upon  examination  to  determine  fitness.  These  appointees 
should  be  permanent  officials  removable  only  by  the  tax  com- 
mission on  grounds  of  dishonesty  or  inefficiency. 

The  state  should  be  divided  into  assessment  districts  in 
accordance  with  the  economic  and  physical  characteristics 
of  the  country  and  the  size  of  the  assessment  task  to  be  per- 
formed. We  suggest  the  following  plan  of  distributing  the 
counties  among  the  districts,  the  numbers  assigned  being  of 
course  purely  arbitrary: 

De  Baca 


Roosevelt 

Curry 

Chaves 

Eddy 

Lea 


Headquarters  at  Roswell. 


30 


REPORT  OF  THE  NEW  MEXICO 


2        J 


3       \ 


Colfax 
Union 

Mora 

Siin  Miguel 

Quay 

CJuatlalupe 

Santa  Fe 

Taos 

Rio  Arriba 

Sandoval 

San  Juan 

Bernalillo 

McKinley 

Valencia 

Socorro 

Torrance 

Lincoln 

Grant 

Hidalgo 

T.una 

Sierra 

Dona  Ana 

Otero 


Headquarters  at  Raton,  Las  Vegas, 
or  Tucumcari. 


^Headquarters  at  Santa  Fe. 

I 
J 


Headquarters  at  Albuquerque. 


Headquarters  at  Deming  or  Las 
Cruces. 


Each  district  should  be  in  charge  of  a  district  supervisor 
of  assessments  who  would  be  responsible  to  the  tax  commission 
for  the  assessment  of  property  and  incomes  within  his  dis- 
trict. He  should  have  direct  and  complete  control  over  the 
local  assessors  and  deputies  and  should  have  power,  subject 
to  the  approval  always  of  the  state  tax  commission,  to  move 
assessors  or  deputies  from  one  county  to  another  temporarily 
as  the  exigencies  of  the  work  demanded.  The  salary  should 
be  sufficient  to  attract  and  hold  competent  supervisors. 

The  disti-ir-t  supervisors  should  be  selected  from  the  best 
material  now  available  among  the  assessors  and  deputies  in 
the  counties.  They  should  be  furnished  by  the  tax  commis- 
sion with  such  materials  and  instruction  as  may  be  necessary 
to  equip  them  as  experts  in  valuation  and  income  tax  proce- 
dure, and  to  accomplish  this  the  tax  commission  should  be 
supplied  ^vith  sufficient  funds  to  pro\dde  such  materials  and 
instruction.  For  this  purpose  the  supervisors  should  meet 
from  time  to  time  in  a  body  with  the  tax  commission,  and 
at  such  conferences  instructions  could  be  made  clear  and  the 
difficult  problems  of  procedure  could  be  explained.    The  com- 


SPECIAL  REVENUE  COMMISSION  31 

mission  should  have  power  to  transfer  supervisors  from  dis- 
trict to  district,  either  temporarily  or  permanently  as  the  good 
of  the  service  may  require. 

The  district  supervisors  should  be  counsellors  and  guides 
to  the  local  assessors  and  deputies.  They  should  travel  to  all 
parts  of  their  districts,  always  subject  to  call  by  the  local 
official  whenever  he  encountered  any  puzzling  problem.  He 
should  keep  himself  free  from  routine  so  far  as  possible  and 
devote  himself  to  such  activities  as  will  tend  to  result  in  com- 
plete, uniform  and  full-value  assessments  within  his  district. 
His  presence  in  a  district  should  make  for  technical  efficiency 
and  accuracy  of  assessment  and  should  result  in  considerable 
relief  to  the  state  tax  commission,  much  of  whose  time  is  now 
occupied  with  correcting  the  errors  of  inefficient  local  asses- 
sors. 

The  offices  of  local  assessor  and  deputy  should  at  first 
be  filled  by  the  present  incumbents  of  the  county  assessment 
offices  as  they  now  exist  under  local  control  insofar  as  those 
officials  might  care  to  enter  an  organization  where  their 
chances  of  retention  and  advancement  depends  solely  upon 
their  professional  efficiency.  The  state  tax  commission  should 
be  entirely  free  to  discharge  any  person  who  did  not  attain 
reasonable  standards  in  his  work  and  should  devise  ways  and 
means  for  speedy  recognition  of  special  merit  by  advancement 
in  rank  and  increase  in  salary. 

It  would  of  course  be  necessary  to  have  a  local  assessor 
and  deputy  in  each  county  and  to  keep  the  assessment  records 
with  due  regard  to  the  boundaries  of  the  political  subdivisions. 

The  examinations  which  should  be  used  as  a  method  of 
determining  the  fitness  of  candidates  for  positions  on  the 
staff  of  assessors  should  be  non-academic  in  character.  Ex- 
aminations admirably  suited  to  this  purpose  have  been  set  in 
other  states.  However,  weight  should  be  given  to  other  con- 
siderations than  mere  ability  to  stand  well  in  an  examination. 
A  candidate's  experience  in  lines  which  would  add  to  his  equip- 
ment, his  personal  qualities  and  general  reputation  for  honesty, 
good  judgment  and  ability,  should  all  be  given  due  weight. 
The  cost  of  our  present  assessment  system  is  approximately 
$135,000.  Under  the  proposed  scheme  it  is  probable  that  the 
cost  would  amount  to  $50,000  more.  To  offset  this  increase, 
there  will  be  a  saving  along  many  lines.  Full  and  equitable 
assessments  will  reduce  the  cost  of  collecting  delinquent  taxes 
which  are  now  due  to  faults  in  the  valuations.  Tax  rolls 
should  reach  the  collector  on  time  and  save  the  expense  in- 
curred by  the  present  delays.  Taxpayers  will  be  saved  the 
cost  of  petitions  for  readjustment  of  assessments.  Long  and 
expensive   sessions    of  equalization   boards   will    be    avoided. 


32  REPORT  OF  THE  NEW  MEXICO 

Fm-thcnnoro,  it  should  be  kept  in  mind  that  the  adininistra- 
tion  of  tlie  ineonie  tax  law,  if  adopted,  will  devolve  upon  the 
state  tax  eoniniission  and  the  general  organization  as  here  re- 
commended will  meet  the  requirements  for  such  administration 
without  additional  cost.     Above  all,  there  Avill  result,  we  be- 
lieve, a  far  more  equitable  distribution  of  the  tax  burden  which 
is  the  aim  of  all  our  endeavors.    We  believe  therefore  that  the 
cost  involved  in  the  adoption  of  the  plan  outlined  above  Avould 
be  very  inconsiderable  compared  with  the  advantages  Avhich 
would  accrue. 

Assessment,  Avhether  it  be  that  of  valuing  prop- 
city  or  arriving  at  net  income,  is  a  technical  task  in 
which  trained  judgment  is  necessary.  That  judgment  can 
scarcely  be  expected  to  be  impartial  and  accurate  so  long  as 
the  assessor  must  have  regard  for  the  local  political  effect  of 
his  acts.  Moreover,  so  long  as  an  assessor  has  nothing  to 
gain  from  industry  and  efficiency,  these  qualities  can  scarcely 
be  expected  to  develop.  The  problem  of  assessment  is  already 
of  great  importance  both  from  the  point  of  view  of  the 
amounts  of  money  involved,  and  from  the  point  of  view  of 
equity  in  the  distribution  of  the  burdens  of  taxation  among 
property  owners.  The  introduction  of  an  income  tax  will  add 
burdens  which  it  would  be  folly  to  impose  upon  the  present 
organization.  The  increase  in  public  functions  which  ap- 
pears to  be  the  trend  of  times  will  make  the  whole  problem 
progressively  gi'cater.  In  our  opinion  it  is  wise  in  this  case 
to  proceed  boldly  and  to  adopt  an  organization  for  valuing 
property  and  assessing  income  which  will  lift  the  whole  pro 
cedure  out  of  politics, 

(Note:     See    Appendices    XIV.    XXII,    XXVI,    XXVII, 
XXVIII.  XXIX.  XXX,  XXXI,  XXXV. 


CHAPTER  III. 

INCOME  TAX. 

Page 

Effect  upon  distribution  of  tax  burden 34 

The  present  statute  36 

Constitutionality  of  proposed  tax 38 

Scope  of  proposed  tax 41 

Reasons  for  restricting  tax  to  personal  incomes 41 

Personal  exemptions  44 

Taxable  income  45 

Date  from  which  gains  shall  be  measured '. 47 

Rates  of  proposed  tax 49 

Probable  yield  of  proposed  tax „....50 

Disposition  of  yield  50 

Administration 51 

Exemption  of  intangible  personal  property 52 

Repeal  of  state  income  tax  law  of  1919 53 


I 

34  REPORT  OF  THE  NEW  MEXICO 

CHAPTER  III. 
INCOME  TAX. 

The  immediate  occasion  for  the  appointment  of  this  com- 
mission was  the  desire  to  secure  a  recommendation  regarding 
the  advisability  of  establishing  a  workable  income  tax  in  this 
state.  The  problem  here  presented  has  occoupied  much  of 
the  time  and  attention  of  the  commission.  The  testimony  of 
the  witnesses  who  appear  before  us  revealed  the  greatest  dif- 
ferences of  opinion  both  as  to  questions  of  fundamental  policy 
and  ns  to  details.  There  was  conflict  of  view  as  to  the  con- 
stitutional status  of  an  income  tax  in  this  state.  There  was 
disagreement  as  to  the  desirability  of  establishing  such  a  tax 
at  all.  There  Avas  no  unanimity  as  to  what  should  be  its  char- 
acter, if  it  were  to  be  established.  Scarcely  any  two  witnesses 
agreed  regarding  the  proper  scope  of  application  of  the  in- 
come tax,  regarding  its  rates,  whether  progressive  or  uniform, 
regarding  the  exemptions,  offsets  and  deductions  and  regard- 
ing its  administration.  In  vieAv  of  the  variety  of  this  testimony 
the  commission  recognizes  that  it  is  impossible  to  formulate 
a  recommendation  which  Avill  give  satisfaction  to  all. 

After  considering  carefully  all  the  factors  involved  in  the 
situation  we  have  come  to  the  conclusion  that  an  income  tax 
should  form  a  part  of  the  state  revenue  system  and  that  it 
should  be  a  personal  income  tax  levied  at  a  uniform  rate.  The 
reasons  Avhich  form  a  foundation  for  this  conclusion  and  a  de- 
tailed explanation  of  the  measure  we  propose  for  enactment 
into  law  are  discussed  in  the  paragraphs  which  follow. 

Effect  Upon  Distribution  of  Tax  Burden.  It  is  a  tru- 
ism in  public  finance  that  a  combination  of  several  compre- 
hensive taxes  gives  better  results  than  any  one  single  tax. 
No  tax  is  perfect.  It  has  not  been  possible  to  devise  a  single 
standard  of  taxation  Avhich  will  be  an  entirely  satisfactory 
measure  of  tax-paying  ability,  and  even  if  it  were  possible  to 
devise  such  a  law,  shortcomings  in  administration  would  un- 
doubtedly bring  about  inequalities.  Consequently  two  fairly 
comprehensive  state  taxes  such  as  we  propose,  one  on  prop- 
erty and  one  on  income,  offer  a  prospect  for  an  improved 
distribution,  for  the  simple  reason  that  one  would  supplement 
the  other.  Within  limits  it  is  true  that  where  the  property 
tax  is  strong  the  income  tax  is  weak  and  Avhere  the  income  tax 
presses  lightly  the  property  tax  bears  heavily. 

Assuming  that  the  same  amount  of  revenue  is  to  be  raised 
as  before  it  seems  to  us  clear  that  the  addition  of  an  income 
tax  will  result  in  a  more  equitable  and  just  tax  system.  The 
charge  that  to  levy  a  tax  first  on  the  property  and  then  on 
the  income  from  that  property  results  in  double  taxation  ap- 
pears to  us  to  overlook  the  fact  that  we  have  two  compre- 


SPECIAL  REVENUE  COMMISSION  35 

liensive  systems,  two  standards  for  gauging  taxpaying  ability. 
Part  of  the  money  which  must  be  had  is  collected  by  reference 
to  the  property  which  a  man  owns.  The  remainder  is  raised 
by  reference  to  the  income  a  man  receives.  If  a  man  has  both 
property  and  income  he  pays  more  than  the  man  who  has  only 
one  or  the  other,  and  this  in  our  opinion  is  not  unjust.  It  is 
directly  in  line  with  the  conviction  shared  by  practically  all 
students  of  the  subject,  the  "funded"  and  "unfunded"  in- 
comes reflect  different  degrees  of  economic  strength. 

It  is  undoubtedly  true  that,  on  the  whole,  property  forms 
a  more  satisfactory  single  basis  for  taxation  in  a  state  like 
New  Mexico  than  does  income,  because  of  the  fact  that  the 
economic  strength  of  the  state  is  still  largely  implicit,  lying 
in  the  womb  of  the  future,  rather  than  fully  developed,  yield- 
ing in  the  form  of  present  income  a  full  normal  return  on  a 
capital  value.  The  economically  strong  members  of  the  com- 
munity are  primarily  those  who  o^^ti  titles  to  resources  which 
are  appreciating  in  value  and  which  they  expect  to  be  able  to 
sell  or  develop  on  a  basis  which  will  yield  a  large  return  in 
proportion  to  their  investment.  In  many  cases  these  men  are 
receiving  very  small  present  returns.  They  are  "land-poor"  or 
they  are  operating  mines  on  a  scale  which  is  small  in  propor- 
tion to  the  total  resources  of  the  deposit,  but  which  neverthe- 
less yields  sufficient  revenue  to  pay  their  carrying  charges  on 
the  whole  project.  They  are  willing  to  accept  small  present 
incomes  in  the  hope  of  receiving  large  returns  some  time  in 
the  future.  Taxation  solely  on  the  ground  of  present  income 
would  not  result  in  a  proper  contribution  from  such  persons. 
It  is  not  a  true  measure  of  their  economic  strength.  Such  an 
income'  tax  as  we  propose,  however,  levied  at  a  light  rate,  the 
proceeds  being  utilized  to  reduce  the  present  rates  on  property, 
would  result  in  a  slight  reduction  to  such  property  o^v^lers 
and  not  in  an  increase  of  their  total  tax  burden. 

The  reason  for  this  net  result  lies  in  the  fact  that  an  in- 
come tax  would  reach  certain  tax  paying  ability  which  now  is 
not  tapped  for  state  purposes  at  all.  The  income  tax  would 
be  a  personal  tax  levied  on  every  individual  residing  in  the 
state,  who  received  an  income  large  enough  to  make  it  worth 
while  to  attempt  to  reach  him.  We  do  not  agree  with  the 
view  that  the  tax  should  apply  to  the  "renting  laborer"  who 
receives  so  small  an  income  that  it  would  cost  more  to  collect 
a  tax  from  him  than  the  tax  would  produce.  We  can  see  no 
sound  objection,  however,  to  applying  the  tax  to  every  per- 
son— whether  he  be  laborer,  investor,  professional  man  or 
business  man,  when  he  does  receive  an  income  which  supports 
him  well  above  the  minimum  of  subsistence. 

However,  it  is  not  merely  the  income  from  personal  ser- 


36  REPORT  OF  THE  NEW  MEXICO 

vices  accruing  to  propertyless  residents  which  now  escapes  the 
net.  There  is  also  the  income  from  intangible  personal  prop- 
erty, generally,  but  particularly  from  the  credits  which  rep- 
resent investments  outside  the  state.  The  assessment  rolls 
show  that  such  property  has  almost  entirely  disappeared  as  a 
taxable  subject  in  spite  of  the  fact  that  it  has  undoubtedly 
been  steadily  increasing  in  value  and  amount.  In  1919,  the 
amount  of  money,  notes  and  credits  assessed  was  only  $992,808  ; 
or  about  one-third  of  one  per  cent  of  the  assessed  wealth  of 
the  state.  Conservative  judges  estimate  that  there  is  at  least 
$40,000,000  of  such  property  which  should  have  been  returned. 
The  commission  realizes  that  this  is  not  a  large  problem  quan- 
titatively but  it  is  convinced,  nevertheless,  that  an  income  tax 
on  the  returns  from  such  investments  will  tend  to  bring  about 
a  closer  approach  to  equip  than  now  exists. 

A  final  consideration  is  that  which  relates  to  the  problem 
of  good  will.  As  the  tax  system  of  the  state  now  stands,  prac- 
tically nothing  except  the  vallies  of  tangible  property  are 
brought  on  the  assessment  roll,  except  insofar  as  the  state  tax 
commission  takes  good  Avill  and  earning  power  into  account 
in  arriving  at  the  assessment  of  such  taxpayers  as  the  rail- 
roads. The  taxation  of  mercantile  business  on  the  basis  of 
the  average  value  of  the  stock-in-trade  certainly  gives  no  very 
accurate  picture  of  the  relative  tax  paying  ability  of  different 
businesses.  The  condition  of  a  tax  upon  the  net  results  of  the 
business  operations,  in-so-far  as  they  are  distributed  as  divi- 
dends, or  made  available  as  distributive  shares  to  partners  or 
sole  proprietors  certainly  Avould  result  in  a  more  equitable 
apportionment  of  the  tax  burden  upon  such  classes  of  business. 

These  are,  in  brief,  the  considerations  which  have  per- 
suaded us  that  the  establishment  of  a  personal  income  tax  is 
sirable  from  the  point  of  view  of  bringing  about  a  more 
scientific  and  equitable  tax  system  for  the  state. 

The  Present  Statute.  The  legislature  at  its  last  regular 
session,  1919.  enacted  an  income  tax  law  which  still  remains 
on  the  statute  books.  (1)  It  imposes  a  progressive  rate  (one- 
hail  to  three  per  cent)  upon  the  incomes  of  individuals  and  of 
certain  businesses  with  offsets  in  the  individual  returns  for 
taxes  paid  by  corporations  and  partnerships  subject  to  the 
tax  and  for  personal  property  taxes  paid  during  the  year. 
This  act  appears  to  have  been  drawn  in  haste  and  with  but 
little  regard  for  either  its  constitutionality  or  its  administra- 
tive feasibility.  As  a  consequence  Governor  Larrazolo,  in  his 
proclamation  of  February  3,  1920,  calling  a  special  session  of 

(1)  1919  Session  Laws  of  New  Mexico,  Chap.  123,  Approved 
March  17,  1919. 


SPECIAL  REVENUE  COMMISSION  37 

the  legislature,  included  among  the  subjects  which  required 
immediate  attention  the  amendment  of  this  income  tax  law 
"in  such  manner  as  to  make  such  law  non-discriminative,  and 
otherwise  to  make  it  conformable  to  the  constitutional  limi- 
tations on  that  subject,  or  else  to  take  such  other  legislative 
action  in  regard  thereto  as  to  the  legislature  may  appear  to  be 
wise  and  proper. ' ' 

When  the  special  session  met  a  bill  was  introduced  sub- 
olituting  a  much  more  elaborate  income  tax.  (1)  It  provided 
that  a  higher  progressive  rate  (one  to  five  per  cent)  should  be 
applied  to  all  income  of  residents,  both  individual  and  corpora- 
tions, and  to  the  incomes  on  no-residents  "derived  from  prop- 
erty located  or  business  transacted  within  the  state."  (2)  In 
general  the  bill  followed  the  lines  of  the  AVisconsin  income  tax 
law.  The  legislature,  however,  after  passing  the  bill  repealing 
1he  law  already  on  the  statute  books,  declined  to  pass  the  bill 
pbove  described  and  assigned  to  this  commission,  which  it  pro- 
ceeded to  establish,  the  duty  "to  inquire  into  and  make  recom- 
mendations as  to  the  policy  or  necessity  of  the  adoption  of  ap- 
propriate legislation  of  a  system  of  taxation  of  incomes  and  the 
relation  of  such  a  system  of  taxation  to  the  present  system 
of  taxation  of  property  *  *  *  *  "  (3).  The  Governor  then 
approved  the  bill  creating  this  commission  but  vetoed  the  bill 
repealing  the  first  income  tax  law.  As  a  consequence  that 
tax  still  remains  technically  valid  and  this  commission  stands 
charged  with  the  somewhat  anomolous  duty  of  passing  upon 
the  wisdom  of  the  adoption  of  a  tax  which  has  already  been 
adopted  and  is  supposed  to  be  in  force. 

It  has  been  hoped  that  some  good  might  emerge  from  the 
veto  of  the  Governor  which  resulted  in  retaining  the  income 
tax  law  of  1919  on  the  statute  book.  It  had  been  thought  that 
a  court  decision  might  be  obtained  on  some  of  the  puzzling 
constitutional  questions  concerning  the  right  of  the  state  to 
impose  a  progressive  income  tax  and  to  grant  a  personal  ex- 
emption not  included  in  the  specific  list  embodied  in  the  state 
constitution.  However,  the  act  was  so  universally  disregarded 
it  has  become  a  dead  letter.  The  conviction  that  it  is  unconsti- 
tutional is  so  widespread  that  practically  no  one  has  filed  the 
return  required  under  penalty  of  fine  and  imprisonment,  and 
not  one  penny  has  been  paid  into  the  state  treasury  under  the 
provisions  of  the  law.  The  state  treasurer,  who  is  charged 
with  the  administration  of  the  law,  did  not  at  first  issue  the 

(1)  Fourth  Legislature,   State  of  New  Mexico,  Special  Session, 
Bill  No.  10. 

(2)  Ibid..  Sees.  3,  4. 

(3)     Fourth  State  Legislature,  Special  Session,  1920. 


38  REPORT  OF  THE  NEW  MEXICO 

blanks  which  the  Liav  directs  that  he  shall  furnish  to  the  tax- 
payers, giving  as  his  explanation  the  statement  that  the  only 
provision  for  funds  to  pay  for  such  forms  is  from  the  proceeds 
of  the  tax  which  he  apparently  felt  it  should  be  folly  to 
attempt  to  enforce. 

Consequently  this  commission  must  undertake  the  formula- 
tion of  its  recommendations  regarding  the  income  tax  without 
rlie  advantage  of  a  court  decision  as  to  what  may  constitu- 
tionally be  adopted.  Moreover,  any  income  tax  which  it  recom- 
riends  must  begin  its  life  under  the  disadvantage  of  this  prece- 
dent of  the  unenforced  and  universally  ignored  income  tax  law 
of  ]91i).  We  cannot  over-emphasize  our  conviction  that  pro- 
cedure such  as  this  described  is  utterly  demoralizing.  If  we 
arc  to  have  respect  for  law  we  should  keep  our  statutes  clear 
of  ridiculous  or  unenforceable  legislation.  This  is  particularly 
true  of  tax  legislation. 

Constitutionality  of  Proposed  Tax.  The  constitutional 
questions  involved  in  the  taxation  of  incomes  in  New  Mexico 
appear  to  center  around  five  points  as  follows : 

1.  The  constitutionality  of  a  tax  on  the  income  of  a  for- 
eign corporation  apportioned  to  the  state  by  some 
more  or  less  arbitrary  method; 

2.  The  constitutionality  of  a  progressive  rate ; 

3.  The  constitutionality  of  a  tax  on  incomes  at  a  flat  rate ; 

4.  The  constitutionality  of  a  tax  on  incomes  of  natural 
persons,  excluding  corporations  as  such,  and 

5.  The  constitutionality  of  a  personal  exemption. 

The  difficulties  involved  in  the  first  and  second  points 
enumerated  above  are  entirely  avoided  as  a  result  of  our  de- 
cision to  recommend  merely  a  personal  income  tax  levied  at 
a  flat  rate.  We  were  convinced  on  other  than  legal  grounds 
that  such  an  income  tax  is  the  type  best  fitted  to  the  condi- 
tions present  in  Ihis  state.  Consequently  it  is  not  necessay  to 
discuss  at  length  the  constitutionality  of  a  progressive  income 
tax  at  this  time.  It  may  be  said,  however,  that  in  the  testimony 
given  in  the  hearings,  it  was  pointed  out  that  in  no  state  having 
a  constitrtion  siniilar  to  ours  has  a  progressive  income  tax 
been  upheld.  (1)  And  in  the  case  of  one  state,  Pennsylvania, 
a  progressive  inheritance  tax  was  declared  in  conflict  with 
constitutional  provisions  similar  to  ours.  (2)     We  are  not  con- 


(1)  In  Missouri  where  th  econstltutional  provisions  are  similar 
although  not  identical  with  ours,  the  income  tax  carries  a  flat,  not  a 
progressive  rate.  Income  Tax  Law  Act  of  April  12,  1917,  as  amended 
May  6,  1919,  Sees.  1,  7. 

(2)  Testimony  of  Mr.  Hawkins,  Report  of  Hearings,  pp.  177-190. 


SPECIAL  REVENUE  COMMISSION  39 

vinced  that  a  constitutional  amendment  would  be  necessary 
to  the  validity  of  a  progressive  income  tax  in  this  state,  but 
the  point  certainly  appears  to  be  open  to  question. 

Hov.'tver,  c^'cn  those  who  most  vigorously  assail  the  con- 
stitutionality of  progressive  income  taxation  assert  with  con- 
fidence that,  in  their  opinion,  the  constitution  of  this  state  per- 
mits the  levy  of  an  income  tax  at  a  flat  rate.   (1) 

The  section  of  the  constitution  which  is  pertinent  reads  as 
follows : 

"Article  VIII.  Section  1. — Equality  and  uniformity. 
Taxes  levied  upon  tangible  property  shall  be  in  proportion 
to  the  value  thereof,  and  taxes  shall  be  equal  and  uniform 
upon  fciibj'.'cts  of  taxation  of  the  same  class." 

It  was  urged  ly  one  witness  (Mr.  V^  .  A.  Hawkins)  that  in- 
come must  be  classified  as  tangible  property  and  consquently 
may  be  taxed  at  the  will  of  the  legislature  subject  to  the 
double  restriction  that  the  tax  must  be  "in  proportion  to  the 
value  of  the  inoon^e"  and  "equal  and  unif'im."  The  vievv- 
more  widely  held,  however,  was  that  income  could  not  be 
properly  considered  to  be  property  at  all.  It  then  formed  a 
class  or  classes  of  taxable  subjects,  subject  to  taxation  equal 
and  uniform  within  the  limits  of  the  class  or  classes.  All  in  all 
a  law  imposing  a  tax  on  incomes  at  a  flat  n/'O.  ^i]  pears  to  be 
reasonably  safe  from  attack  on  constitutional  grounds. 

The  further  question  arises,  however,  as  to  whether  the 
legislature  may  levy  a  tax  on  the  incomes  of  natural  persons 
and  not  upon  the  incomes  of  corporations  which  are  artificial 
persons  in  contemplation  of  the  law.  We  are  inclined  to  be- 
lieve that  a  classification  which  would  exclude  corporations 
but  tax  their  dividends  received  by  resident  stockholders 
would  be  upheld  by  the  courts.  Certainly  corporations  are 
frequently  classified  for  special  treatment  by  direct  inclusive 
definition.  This  has  recently  been  done  in  this  very  state  for 
the  purpose  of  imposing  a  special  tax.  (2)  The  classification 
of  corporations  by  exclusion  would  certainly  seem  to  be  an 
equally  justifiable  procedure. 

The  final  point,  the  constitutionality  of  the  personal  ex- 
emption,a  feature  common  to  all  income  tax  laws,  is  a  very 
interesting  one.  it,  again,  depends  to  some  extent  for  its  -•<- 
lution  upon  whether  or  not  income  is  to  be  defined  as  property. 
In  our  opinion  income  is  not  correctly  classified  as  property. 

(1)  Apparently  these  persons  do  not  consider  it  necessaary  that 
this  rate  be  the  same  as  that  imposed  on  property  generally. 

(2)  The  State  Franchise  Tax,  Session  Laws  of  New  Mexico,  1919, 
Chap.  100,  Approved  March  17,  1919. 


40  REPORT  OF  THE  NEW  MEXICO 

In  contrast  with  the  conception  of  property  as  the  sum  total 
of  one's  possessions  at  a  given  point  of  time,  the  economic  con- 
cept of  income  is  one  of  flow  and  accretion  during  a  given 
period  fixed  by  two  points  of  time.  We  believe  that  this  is 
the  view  which  Avill  prevail  in  the  courts. 

The  New  Mexico  constitution  lists  certain  prescribed  ex- 
emptions aiid  specifies  one  permissive  exemption,  the  extension 
of  which  is  left  to  the  discretion  of  the  legislature.  There  is 
no  bhinket  prohiliition  of  other  exemptions  as  is  common  in 
state  constitutions.  The  question  is  whether  these  prescribed 
and  permissive  exemptions  imply  a  limitation  upon  the  poAver 
of  the  legislature  to  grant  further  exemptions.  The  sections 
themselves  are  these : 

"Article  VIII. — Taxation  and  Revenue. — Section  3., 
Exemptions.  The  property  of  the  United  States,  the  State 
and  all  counties,  towns  and  cities  and  school  districts,  and 
other  municipal  corporations,  public  libraries,  community 
ditches,  and  all  laterals  thereof,  all  church  property,  all 
property  used  for  educational  or  charitable  purposes,  all 
cemeteries  not  used  or  held  for  private  or  corporate  prof- 
it, and  all  bonds  of  the  state  of  New  Mexico,  and  of  the 
counties,  municipalities  and  districts  thereof  shall  be  ex- 
empt from  taxation.  ******* 

"Section  5.  Exemptions  to  head  of  family.  The  legis- 
lature may  exempt  from  taxation  property  of  each  head 
of  a  family  to  the  amount  of  two  hundred  dollars." 

If  income  were  thrown  into  the  category  of  property. 
Section  5  would  clearly  make  it  impossible  to  extend  a  per- 
sonal exemption  of  $200  to  a  head  of  a  family  subject  to  the 
income  tax.  Moreover,  a  law  which  calls  an  item  a  deduc- 
tion rather  than  an  exemption  would  appear  to  us  to  resort 
to  an  obvious  subterfuge.  This  item  is  termed  an  exemption 
in  the  federal  income  tax  law,  and  in  such  laws  generally,  even 
if  one  considers  it  a  deduction  for  living  expenses  he  is  con- 
fronted with  the  necessity  of  declaring  that  living  expenses 
shall  be  deducted  when  they  fall  below  a  specified  amount  and 
not  deductible  above  that  amount,  which  raises  another  legal 
difficulty. 

However,  as  stated  above,  we  are  inclined  to  the  opinion 
that  income  will  not  be  defined  as  property.  In  this  case  the 
r-onstitutional  difficulty  vanishes  into  thin  air.  We  are  strength- 
ened in  this  view  by  the  decision  of  the  Missouri  courts  up- 
holding the  income  tax  law  of  that  state.   (1)     The  constitu- 


(1)     Ludlow  Saylor  Wire  Co.  v.  Wollbrinck,  205  S.  W.  Supreme 
Court  of  Missouri,  June  28,  1918. 


SPECIAL  REVENUE  COMMISSION  41 

tional  provisions  of  Missouri  are  more  narrow  Avith  respect 
to  restrictions  on  exenij^tions  than  the  corresponding  provi- 
sions in  this  state.  Section  6  of  Article  X  of  the  Missouri 
constitution  corresponds  to  section  3  of  Article  VIII  of  our 
constitution  quoted  above.  It  specifies  certain  property  which 
shall  be  exempt  from  taxation.  Section  6  is  followed  by  this 
statement : 

"Sec.  7.    All  laws  exempting  property  from  taxation, 
other  than  the  property  above  enumerated,  shall  be  void." 

In  the  face  of  this  flat  prohibition  of  property  exemptions, 
the  Missouri  court  declared  constitutional  an  income  tax  law 
carrying  exemptions  of  $1000  to  single  persons,  $2000  to  heads 
of  families,  plus  $200  for  each  dependent.  The  language  of 
ihe  Missouri  statute  as  it  now  stands  uses  the  term  exemptions. 
It  reads  "  *  *  *  there  shall  be  a  llowed  as  an  exemption  in  the 
nature  of  a  deduction  from  the  amoimt  of  net  income  *  *  *  " 
the  specified  sums.  (1) 

Scope  of  Proposed  Tax.  AYe  recommend  that  the  income 
tax  be  made  a  strictly  personal  tax,  applying  to  the  net  in- 
come of  every  person  within  the  state.  We  suggest  that  at 
the  present  time  no  effort  be  made  to  tax  business  as  such 
by  means  of  a  state  income  tax.  The  personal  income  tax  "will 
reach  the  profits  from  business  as  they  are  made  available  to 
the  owners  resident  within  the  state  by  the  device  of  includ- 
ing in  the  individual  returns  (1)  dividends  received  from  all 
corporations  both  foreign  and  domestic,  (2)  distributive  shares 
of  partnership  and  (3)  the  total  net  income  of  individual  en- 
terprises. 

Reasons  for  Restricting  Tax  to  Personal  Incomes.  It  would 
be  quite  proper,  were  it  deemed  desirable,  to  impose  both  a 
personal  income  tax  and  a  business  income  tax — the  personal 
income  tax  upon  the  incomes  of  all  persons  resident  within 
this  state  regardless  of  the  source  of  that  income  and  the 
business  tax  upon  the  net  income  arising  from  l)usiness  within 
this  state  regardless  of  the  residence  of  the  owners  of  the 
business.  Our  recommendation  of  a  personal  income  tax  is 
not  to  be  construed  as  an  indication  that  in  principle  we  are 
opposed  to  a  business  income  tax.  The  situation,  indeed,  would, 
Ave  think,  probably  be  someAA'hat  improved  from  the  stand- 
point of  equity  if  such  a  tax  Avere  imposed  by  this  and  every 
other  state.  There  is  no  sound  theoretical  objection  to  busi- 
ness taxes  superimposed  upon  personal  income  taxes  CA^en  Avith- 

(1)  Missouri  Income  Tax  Law,  Act  of  April  12,  1917,  as  amended 
May  6.  1919,  Sec.  6. 


42  REPORT  OF  THE  NEW  MEXICO 

out  deductions  for  dividends  or  profits  in  the  personal  returns. 
However,  we  are  convinced  that  the  personal  income  tax  should 
be  established  irrespective  of  the  decision  with  regard  to  the 
business  income  tax,  and  we  have  concluded  that  it  is  cer- 
tainly not  necessary  and  probably  not  wise  to  urge  both  at 
this  time. 

The  reasons  lying  back  of  the  conclusion  are  chiefly  prac- 
tical ones. 

(1)  In  the  absence  of  such  business  income  taxes  in 
neighboring  states  it  is  possible  that  certain  businesses  in  this 
state  would  find  themselves  operating  at  a  competitive  dis- 
advantage should  such  a  tax  be  imposed  here. 

(2)  The  addition  of  a  special  state  levy  on  business  in- 
comes to  the  existing  property  taxes,  the  federal  income  tax, 
the  federal  excess  profits  tax  (in  the  case  of  corporations),  the 
proposed  new  personal  income  tax  on  the  profits  when  made 
available  to  individuals  and  the  various  special  taxes  which 
business  must  pay  would  be  justified,  we  believe,  only  in  a 
case  of  extreme  necessity.  There  exists  no  compelling  neces- 
sity from  the  point  of  view  of  revenue  for  the  establishment  of 
a  business  income  tax.  The  adoption  of  our  other  suggestions 
wdll,  we  believe,  result  in  the  production  of  all  the  money 
necessary  for  present  needs. 

(3)  The  establishment  of  a  business  tax  on  incomes 
should  be  accompanied,  we  are  convinced,  by  the  abolition  of 
all  other  taxes  on  business,  except  the  tax  on  real  estate,  and 
we  have  not  yet  reached  a  stage  of  development  in  this  state 
where  si^ch  action  Avould  be  justified. 

(4)  As  has  been  explained,  the  income  from  business  re- 
ceived by  residents  of  New  Mexico — total  profits  in  the  case 
of  indi\nduals,  distributive  shares  of  profits  in  the  case  of 
partners  and  dividends  in  the  case  of  owners  of  stock  in  cor- 
porations (1)  will  be  reached  under  the  proposed  personal  in- 
come tax.  It  is  evident  from  the  testimony  given  at  the  hear- 
ings that  the  people  of  the  state  are  at  present  not  prepared 
to  accept  with  good  grace  a  tax  on  business  as  such,  unac-- 
companied  by  arrangements  for  offsets  because  of  property 
taxes,  including  taxes  on  real  estate,  and  income  taxes  paid  by 
the  businesses.  Such  offsets,  even  if  they  were  justified  would 
in  actual  operation  involve  complexities  which  would  make 
the  administration  of  the  tax  system  very  difficult. 

(5)  Under  the  somewhat  primitive  economic  conditions 

(1)  Profits  made  by  individuals  through  sales  of  stock  at  prices 
higher  than  tho.^e  at  which  they  were  acquired  would  become  taxable 
also  of  course,  and  any  undistributed  profit  of  the  corporations  would 
tend  to  be  reflected  in  the  market  standing  of  these  stocks. 


SPECIAL  REVENUE  COMMISSION  ,43 

which  Still  obtain  in  this  state,  it  is  our  belief  that  the  tax 
paying  ability  of  most  businesses  can  be  farly  well  measured 
by  a  proper  valuation  of  the  property  used.  This  is  certainly 
true  of  the  railroads,  the  mines,  the  farms  and  the  cattle  and 
sheep  ranches.  It  is  less  true  of  mercantile  businesses  and 
agencies.  The  addition  of  the  personal  income  tax  on  profits 
will  go  far  to  eliminate  the  inequality  which  may  here  exist 
and  result  in  an  equalization  of  the  burden  upon  those  inter- 
ested in  business  which  will  be  on  the  whole  satisfactory. 

(6)  The  consideration  which  influences  us  perhaps  more 
than  any  other  is  a  reluctance  to  ask  unreasonable  things  of 
the  administration.  Any  attemps  to  reach  the  portion  of  the 
income  of  interstate  businesses  which  might  legally  be  made 
subject  to  a  business  income  tax  imposed  by  the  State  of  New 
Mexico  would  encounter  serious  practical  difficulties.  The 
methods  of  allocating  incomes  used  by  certain  states  are  com- 
plicated, arbitrary  and  vexatious  in  operation. 

Some  conception  of  the  difficulties  involved  may  be  gained 
by  reading  the  following  excerpt  from  the  New  York  statute 
prescribing  the  basis  of  apportionment  used  in  that  state: 

Sec.  214.  Computation  of  Tax.— If  the  entire  business 
of  such  corporation  be  not  transacted  within  the  state,  the 
tax  imposed  by  this  article  shall  be  based  upon  a  propor- 
tion of  such  entire  net  income,  to  be  determined  in  ac- 
cordance with  the  following  rules:  The  proportion  of 
the  entire  net  income  of  the  corporation  upon  which  the 
tax  under  this  article  shall  be  based,  shall  be  such  propor- 
tion of  the  entire  net  income  as  the  aggregate  of 

1.  The  average  monthly  value  of  the  real  property 
and  the  tangible  personal  property  within  the  state. 

2.  The  average  monthly  value  of  bills  and  accounts 
receivable  arising  from  (a)  personal  property  sold  by  the 
corporation  for  merchandise  manufactured  by  it  within 
this  state;  (b)  personal  property  owned  by  the  corpora- 
tion and  not  manufactured  by  it  within  this  state,  but 
sold  by  it  or  its  agents  and  located  within  the  state  at 
the  time  of  the  receipt  of  the  order;  (c)  the  purchase  or 
sale  of,  or  trading  in,  goods,  wares  or  merchandise  not 
located  at  any  place  at  which  the  corporation  conducted 
a  permanent  or  continuous  business  without  the  state,  and 
where  the  bills  and  accounts  receivable  arose  from  orders 
received  or  accepted  by  any  officer  or  agent  or  at  any 
place  of  business,  in  this  state;  and  (d)  services  performed 
by  any  officer,  agent  or  representative  of  the  corporation 
connected  with,  sent  from,  or  reporting,  either  directly 


44  REPORT  OF  THE  NEW  MEXICO 

or  indirectly,  to  any  officer  located  in  this  state  or  at  any 
office  located,  owned,  rented  or  occupied  in  this  state. 

3.  The  proportion  of  the  average  values  of  the  stocks 
of  other  corporations  owned  by  the  corporation,  allocated 
to  the  state  as  pro\dded  by  this  section,  but  not  exceeding 
ten  per  centum  of  the  real  and  tangible  personal  property 
segregated  to  this  state  under  this  article,  bears  to  the 
aggregate  of 

4.  The  average  monthly  value  of  all  the  real  prop- 
erty and  tangible  personal  property  of  the  corporation, 
wherever  located. 

5.  The  average  total  monthly  value  for  the  fiscal  or 
calendar  year  of  bills  and  accounts  receivable  arising 
from  (a)  personal  property  sold  by  the  corporation  from 
merchandise  manufactured  by  it  within  and  without  this 
state ;  and  (b)  the  purchase,  or  sale  of,  or  trading  in,  per- 
sonal property  or  from  services  performed  by  the  corpor- 
ation, its  officers  or  agents,  excluding  those  arising  in  any 
way  from  advances  or  loans. 

6.  The  average  total  value  of  stocks  of  other  cor- 
porations owned  by  the  corporation,  but  not  exceeding  ten 
per  centum  of  the  aggregate  real  and  tangible  personal 
property  set  up  in  this  report  ....  (1) 

"We  hesitate  to  ask  the  State  Tax  Commission  to  under- 
take the  administration  of  a  business  income  tax,  which  would 
involve  intricate  problems  of  apportionment  requiring  for  their 
solution  some  such  complicated  provision  as  that  quoted  above. 
Moreover,  it  must  be  remembered  that  in  this  state  the  pecu- 
liarly difficult  problems  of  arriving  at  the  net  income  of  the 
mines  would  have  to  be  met,  problems  which  would  certainly 
stretch  to  the  breaking  point  the  resources  of  the  commission, 
particularly  if  some  basis  for  calculating  depletion  had  to  be 
adopted  different  from  that  used  in  the  federal  returns.  Fi- 
nally when  we  consider  the  fact  that  we  are  in  this  report 
calling  upon  the  commission  to  extent  it  functions  radically 
in  several  other  directions,  we  are  forced  to  the  conclusion  the 
relatively  slight  advantage  which  might  be  expected  to  accrue 
from  the  establishment  of  a  business  income  tax  do  not  justify 
us  in  recommending  it  at  the  present  time. 

Personal  Exemptions.  We  recommend  that  the  personal 
exemptions  be  made — precisely  the  same  as  those  prescribed 
under  the  federal  income  tax.  The  provisions  of  the  federal 
revenue    act  of  1918  allow : 

fl)     Laws  of  1917   (New  York),  Chap.  T26,  Sec.  214,  as  amended 
by  Laws  of  1920,  Chap.  640. 


SPECIAL  REVENUE  COMMISSION  45 

Sec.  216.  (c)  In  the  case  of  a  single  person,  a  per- 
sonal exemption  of  $1000,  or  in  the  case  of  the  head  of 
a  family  or  a  married  person  living  with  husband  or  wife 
a  personal  exemption  of  $2000  *  *  *  *  $200  for  each  per- 
son (other  than  husband  or  wife)  dependent  upon  and  re- 
ceiving his  chief  support  from  the  taxpayer,  if  such  de- 
pendent person  is  under  eighteen  years  of  age  or  is  in- 
capable of  self-support  because  mentally  or  physically 
defective. 

One  great  advantage  of  adopting  the  federal  exemptions 
is  an  administrative  one.  The  state  tax  is  thus  made  practi- 
cally co-extensive  vnih  the  federal  income  tax  which  gives  an 
effective  check  upon  evasion.     (Page  52.) 

Moreover,  we  believe  that  the  federal  exemptions  are  es- 
sentially reasonable  and  just.  It  has  been  urged  upon  us  that 
the  personal  exemption  should  be  made  as  low  as  $500,  for  a 
single  man  and  $1000  for  a  married  man.  We  are  of  the 
opinion,  however,  that  these  figures  are  below  a  decent  sub- 
sistence level  in  this  era  of  high  prices.  In  Great  Britain 
where  a  personal  exemption  of  £120  obtains,  the  Royal  Com- 
mission on  the  income  tax  has  recently  recomended  a  substan- 
tial increase  and  state  income  taxes  generally  in  this  coHintry 
grant  more  liberal  exemptions  than  the  figures  suggested  to 
us. 

It  appears  to  us  to  be  a  mistake  to  assume  that  because 
a  "renting  laborer"  pays  no  direct  tax  he  bears  no  tax  bur- 
den. In  his  rent  must  be  included  the  equivalent  of  the  tax 
upon  his  house  and  part  of  the  family  taxes  paid  by  business 
men  is  undoubtedly  shifted  on  to  purchasers,  of  whom  "rent- 
ing laborers"  form  a  part. 

We  are  disposed  to  favor  the  course  of  frankly  labeling 
the  allowances  as  exemptions.  That  is  what  they  are.  They 
are  called  exemptions  in  the  Missouri  law  which  has  been  up- 
held under  constitutional  provisions  more  strict  than  those 
which  appear  in  the  constitution  of  New  Mexico.  We  are 
unable  to  see  how  the  case  for  their  constitutionality  would  be 
improved  by  calling  them  deductions. 

Taxable  Income.  Income  for  purposes  of  the  proposed 
state  tax  should  approximate  as  nearly  as  possible  the  defini- 
tion of  income  as  used  in  the  federal  statute.  As  will  appear 
later,  we  propose  to  depend  upon  the  federal  administration 
to  as  great  an  extent  as  possible  and  it  would  be  a  material 
advantage  both  to  the  state  officials  and  to  the  individual  tax 
payers  to  be  able  to  make  an  identical  return  to  both  national 
and  state  governments,  including  the  same  items  as  income  and 
subtracting  the  same  items  as  deductions.     Some  items  must 


46  REPORT  OF  THE  NEW  MEXICO 

necessarily  receive  different  treatment  from  that  given  under 
the  federal  law  and  regulations  and  these  can  be  included, 
we  believe,  in  a  short  supplementary  schedule  attached  to  a 
duplicate  of  the  federal  return. 

The  items  which  demand  special  attention  in  adapting  the 
federal  definition  of  taxable  income  to  the  purposes  of  a 
state  income  tax  include  the  following : 

(1)  Income  from  personal  service,  (a)  The  state  must 
allow  the  deduction  of  federal  salaries  which  are,  with  cer- 
tain exceptions,  taxed  under  the  federal  law.  (b)  The  state 
should  tax  the  salaries  of  its  own  public  servants  except  insofar 
as  they  are  safeguarded  by  provisions  of  the  state  constitution. 

(2)  Income  from  business,  profits  from  sales.  The  ques- 
tion of  the  date  from  which  property  gains  shall  be  measured 
and  as  to  which  depletion  and  depreciation  deductions  shall  be 
calculated  is  discussed  in  the  following  section,  (Page  47.) 
It  is  obviously  desirable  to  adopt  the  federal  date  of  March  1, 
1913,  for  this  would  eliminate  a  great  deal  of  labor  for  both 
the  state  and  the  taxpayers  and  would  make  unnecessary  any 
modifications  in  the  item  of  income  from  business  as  reported 
for  federal  purposes. 

(3)  Income  from  interest,  (a)  Interest  on  certain  federal 
bonds  which  is  subject  to  the  federal  surtaxes  would  necessari- 
ly be  deducted  for  purposes  of  the  state  tax.  (b)  Interest  on  the 
securities  of  other  states  than  Ncav  Meixco  and  subdivisions 
thereof  should  be  added,  (e)  Interest  on  obligations  of  this 
state  and  its  political  subdivisions  should  be  included  insofar 
as  it  is  possible  to  do  so  under  their  terms  of  issue. 

(4)  Income  from  dividends,  dividends  from  all  corpora- 
tions, domestic  and  foreign  should  be  included  in  net  income 
subject  to  the  full  rate.  The  federal  law  exempts  from  the 
normal  rate  dividends  from  corporations  subject  to  the  feder- 
al income  tax.  The  federal  practice  with  regard  to  stock 
dividends  should  be  followed. 

(5)  Deductions  for  interest  paid.  Interest  paid  on  money 
borrowed  to  foreclose  or  carry  tax-exempt  securities  is  not 
deductible  under  the  federal  statute.  This  interest  limitation 
is  essentially  sound.  The  federal  figures  cannot  be  adopted 
for  state  purposes  without  modification,  however,  because  the 
securities  exempt  from  the  federal  tax  are  not  the  same  in 
all  cases  as  the  securities  which  would  be  exempt  under  the 
proposed  state  law.  The  exempt  securities  under  the  pro- 
posed law  are  so  restricted,  however,  as  to  make  the  problem 
quantitatively  insignificant  and  probably  the  wisest  course  of 
action  would  be  to  follow  the  New  York  precedent  and  per- 
mit the  full  deduction  of  all  interest  paid. 

(6)  Deductions  for  taxes.     All  taxes  except  federal  in- 


SPECIAL  REVENUE  COMMISSION  47 

come  taxes  should  be  deductible  but  no  taxes  should  be  used  as 
offsets.  This  procedure  will  occasion  no  modification  in  the 
federal  return  except  that  the  state  income  tax  itself,  if  it 
has  been  deducted,  will  not  be  re-introduced.  The  refusal  to 
permit  the  deduction  of  the  federal  income  tax  has  a  precedent 
in  the  New  York  practice.  After  all,  what  the  state  wishes 
to  determine  as  a  standard  is  a  person's  income  before  that 
income  has  been  reduced  by  the  federal  government  taking  its 
portion. 

Date  From  Which  G-ains  Shall  Be  Measured.  In  this 
country  it  is  customary  to  define  income  so  as  to  include  gains 
and  profits  arising  from  the  sale  of  property  and  to  permit  the 
deduction  of  losses  realized  on  similar  transactions.  March  1, 
1913,  has  been  specified  in  the  federal  statute  as  the  date  from 
which  such  gains  and  losses  shall  be  measured  in  cases  where 
the  property  was  acquired  before  that  date.  This  date  becomes 
significant  also  in  connection  with  the  determination  of  de- 
ductions for  depletion  and  depreciation  in  certain  cases.  March 
1,  1913,  marks  the  time  when  the  federal  government  acquired 
the  power,  through  the  ratification  of  the  16th  amendment,  to 
impose  an  income  tax  without  apportionment. 

It  seems  to  us  very  desirable  from  the  point  of  view  of 
administrative  simplicity  to  adopt  for  the  purposes  of  the  state 
income  tax  the  same  date  as  that  used  by  the  federal  govern- 
ment. In  fact  unless  this  date  can  be  selected,  we  are  inclined 
to  believe  that  the  complications  of  a  state  income  tax  would 
be  so  great  as  to  make  its  establishment  a  matter  of  doubtful 
advisability  at  this  juncture. 

The  legal  status  of  a  provision  which  would  tax  gains  as 
measured  from  an  arbitrary  date  such  as  that  suggested  ap- 
pears not  to  be  definitely  established.  Most  of  the  state  in- 
come tax  laws  now  in  force  specify  the  first  day  of  the  year 
in  which  the  income  tax  was  established  as  the  point  of  de- 
parture in  measuring  gain.  The  Wisconsin  law  of  1911  (1),  as 
originally  passed,  contained  the  following  provisions: 

Section  1087  M-I.  There  shall  be  assessed,  levied,  col- 
lected and  paid  a  tax  on  incomes  ****** 

Section  1087  M-2  (2)  The  term  "income"  as  used  in 
this  act  shall  include  : 

(d)     All profits  derived from  the  purchase 

and  sale  of  any  property  or  other  valuables  acquired 
within  three  years  previous  or  from  any  business  what- 
ever." 

(1)     Wisconsin  Session  Laws,  1911,  Chap.  658. 


48  REPORT  OF  THE  NEW  MEXICO 

The  Sii{)T-('nio  eoiii-t  of  Wisconsin  discussed  this  section  on 
January  1).  1912,  in  the  following  summary  manner.  (State 
ex  rel.  Rohns  v.  Frear  et  al,  134  N.  W.  p.  691)  : 

"One  further  consideration  Ave  overrule  here  without  com- 
ment, for  the  reason  that  it  seems  very  unsubstantial,  namely, 
the  objection  that  the  laAv  is  retroactive  and  void,  ****  because 
it  includes  profits  dcri\ed  from  the  sale  of  property  purchased 
at  any  time  within  three  years  previously." 

In  1913  (Wisconsin  session  laAvs  of  1913,  p.  720,  Sec. 
1087  M-2)  the  following  clause  was  substituted  for  that  quoted 
above : 

"All  profits  derived  from  the  transaction  of  business  or 
from  the  sale  of  real  estate  or  other  capital  assets;  provided 
that  of  the  profits  derived  from  the  sale  of  real  estate  or  other 
capital  assets  acquired  previous  to  January  1,  1911,  only  such 
proportion  shall  be  taxable  as  the  time  between  January  1, 
1911,  and  the  date  of  the  sale  bears  to  the  entire  time  betAveen 
the  date  of  acquisition  and  the  date  of  the  sale." 

The  Wisconsin  tax  was  a  progressive  one,  and  to  insure 
its  validity  it  was  deemed  necessary  to  vsecure  an  amendment  to 
Sec.  1,  Art.  VIII  of  the  constitution.  Property  may  be  taxed 
only  under  the  uniformity  rule.  The  question  of  the  constitu- 
tionality of  the  rule  of  apportionment  prescribed  in  the  1913 
amendment  just  quoted  was  assumed  by  the  supreme  court 
of  the  State  ex  rel  Bundy  v.  Nygaard  (163  Wis.  307)  decided 
May  23.  1916.  This  decision  does  not  exactly  meet  the  consti- 
tutional question  as  it  would  arise  in  this  state,  because  this 
state  had  power  before  March  1,  1913,  to  levy  a  tax  on  incomes 
and  the  proposed  tax  in  this  state  is  to  be  derived  at  a  uni- 
form, not  a  progressive  rate.    The  court  said  in  part : 

"When  the  income  tax  law  was  first  passed  in  1911,  the 
stock  in  question  was  sold  by  the  plaintiff  and  was  then  of  a 
value  of  $214,000.  This  fact  is  admitted  to  be  established.  In 
the  judgment  of  the  court  all  of  this  was  capital,  or,  in  other 
wards  property;  its  status  was  fixed;  no  part  of  it  could  be 
made  into  income  by  legislative  enactment.  It  was  subject  to 
taxation  as  property  under  the  uniformity  rule  but  not  other- 
wise. It  is  not  deemed  necessary  to  go  further  in  the  present 
case."  The  Wisconsin  legislature  then  passed  the  present  rule 
that  "the  fair  market  value  of  such  property  as  of  January  1, 
1911,  shall  be  the  basis  for  determining  such  gain  or  loss." 
(Wisconsin  Session  Laws  of  1917,  Chap.  248.) 

Under  the  federal  income  tax  procedure  increases  in  the 
value  of  capital  assets  are  deemed  to  become  taxable  only  upon 
realization.  They  are  taxed  in  the  year  when  the  transaction 
is  closed  and  the  profit  established,  but  since  the  federal  gov- 
ernment had  no  power  to  tax  incomes  without  apportionment 


SPECIAL  REVENUE  COMMISSION  49 

prior  to  March  1,  1913,  any  value  -which  can  be  shown  to  have 
existed  on  that  date  is  not  taxable  as  increase.  This 
state  Avould  not  operate  under  that  limitation.  Even  before 
March  1,  1913,  it  had  power  to  tax  incomes.  Following  the 
practice  of  the  federal  income  tax  it  would  appear  possible 
for  it  to  tax  in  the  current  year  all  profits  realized  in  that 
year  as  measured  by  reference  to  original  cost  even  though 
purchased  before  March  1,  1913.  It  would  seem  to  be  possible 
if  the  legislature  should  deem  it  advisable  for  administrative 
reasons  to  place  the  datum  line  at  some  definite  point  in  the 
case  of  assets  purchased  a  long  time  ago.  As  has  been  pointed 
out  the  question  appears  not  to  have  been  definitely  settled, 
but  we  are  of  the  opinion  that  the  legislature  would  be  quite 
justified  in  selecting  the  date  of  March  1,  1913,  for  an  income 
tax  in  this  state  and  we  believe  that  the  courts  would  sustain 
the  selection. 

The  question  of  equity  involved  is  not  a  serious  one.  In 
increasing  or  decreasing  income  tax  rates  or  in  abolishing  such 
taxes,  it  is  customary  to  disregard  entirely  this  issue  of  equity. 
At  is  true  that  under  our  proposed  law  a  man  who  bought  a  lot 
for  $1000  on  March  1,  1913,  and  sold  it  on  December  31,  1919, 
for  $2000  would  pay  no  income  tax,  whereas  if  he  sold  it  on 
January  1,  1920,  he  would  be  assessed  on  a  profit  of  $1000. 
But  the  same  thing  would  be  true  of  a  lawyer  who  received 
$1000  fee  on  January  1st  for  services  performed  during  the 
preceding  seven  years  provided  he  did  not  keep  books  on  the 
accrual  basis.  At  the  hearings  before  the  tax  commission  the 
question  was  put  to  large  taxpayers  as  to  whether  they  would 
have  any  objection  to  the  use  of  March  1,  1913,  as  a  datum 
line  and  all  the  replies  were  in  the  negative.  The  administra- 
tive advantages  of  selecting  that  date  would  be  so  overwhelm- 
ingly great  that  we  are  constrained  to  urge  its  adoption. 

Eates  of  Proposed  Tax.  We  are  not  opposed  to  the  principle 
of  progression  in  an  income  tax.  Our  recommendation  in 
favor  of  a  flat  rate  is  not  the  result  of  any  aversion  to  that 
principle.  It  is  rather  the  logical  outcome  of  a  set  of  special 
circumstances  w^hich  exists  in  this  state  at  the  present  time. 

In  the  first  place  the  proposed  income  tax  will  be  in  ad- 
dition to  the  federal  income  tax  which  itself  embodies  the 
principle  of  progression  in  a  form  more  extreme  than  has  ever 
been  attempted  in  the  history  of  public  finance.  The  federal 
rates  even  with  the  four  percent  reduction  in  the  normal  tax 
established  in  1919,  rise  to  a  maximum  of  73  percent  upon  the 
largest  increment  of  income.  Consequently  the  combination  of 
a  low  flat  state  rate  with  this  highly  progressive  national  rate 
will  still  result  in  a  very  sharp  discrimination  in  favor  of  the 
recipient  of  small  incomes.    If  the  federal  government  should 


50  REPORT  OF  THE  NEW  MEXICO 

reduce  its  progressive  scale  the  question  might  then  be  raised 
as  to  whether  the  state  rate  should  not  be  graduated.  But  we 
are  of  the  opinion  that  so  long  as  the  federal  rates  remain  at 
the  present  level,  the  state  is  precluded  from  establishing  a 
heavily  progressive  state  income  tax.  The  soundest  course  at 
the  present  juncture  is  to  levy  only  a  low  flat  rate.  A  flat 
rate,  moreover,  is  simpler  than  a  progressive  rate  occasioning 
less  labor,  both  for  the  taxpayer  and  the  administration. 

Again,  the  rate  we  propose  it  so  small  as  to  make,  after 
all,  the  whole  question  of  progression  negligible  in  importance. 

Finally,  there  exists  a  question  as  to  the  legal  status  of  a 
progressive  tax  in  this  state.  We  do  not  urge  this  legal  point 
as  a  conclusive  argument  against  the  adoption  of  a  progressive 
rate.  We  consider  the  other  points  enumerated  above  sufficient 
to  establish  the  case  in  favor  of  a  flat  rate. 

The  rate  imposed  should,  we  believe,  be  very  low.  It 
would  not  be  safe  in  our  opinion  to  make  the  rate  larger  than 
four  per  cent.  During  the  first  year  of  its  establishment  the 
rate  should  not  be  more  than  two  per  cent.  On  the  whole,  con- 
sidering the  financial  necessities  of  the  state,  the  probable 
yield  of  the  tax,  the  effect  upon  the  administrative  task  and 
the  interests  of  the  taxpayers  of  the  state  as  a  whole,  we  have 
concluded  that  the  rate  of  two  per  cent  would  best  meet  the 
situation. 

Probable  Yield  of  Proposed  Tax.  In  Appendix  II  will 
be  found  detailed  statistics  regarding  the  taxable  income  of 
the  state  as  reported  for  purposes  of  the  federal  income  tax. 

Using  those  figures  as  a  basis  and  assuming  that  the  state 
administration  will  be  neither  more  or  less  efficient  than  the 
federal,  we  reach  the  conclusion  that  a  two  per  cent  flat  rate 
would  have  yielded  the  state  about  $265,376  in  1917.  Detailed 
figures  for  the  later  years  are  not  yet  available  but  on  the 
basis  of  the  general  totals  for  1918  and  the  treasury  estimates 
for  1919,  the  yield  in  1918  would  have  been  about  20  per  cent 
greater  and  in  1919  about  46  per  cent  greater  than  in  1917. 

On  the  whole  we  are  inclined  to  believe  that  about  $150,000 
could  be  expected  for  each  one  per  cent  in  the  rate  of  a  uni- 
form state  tax  on  the  personal  incomes  arising  in  1920.  This 
would  make  the  yield  of  our  proposed  two  per  cent  tax  ap- 
proximately $300,000. 

Disposition  of  The  Yield.  The  disposition  of  the  yield  of  a 
state  income  tax  offers  a  problem  which  is  met  in  different 
ways  in  different  states  according  to  the  local  conditions  there 
existing.  In  those  states  where  the  need  for  additional  local 
revenue  is  very  pressing  ,and  where  the  localities  have  been 
asked  to  surrender  certain  taxes  as  a  condition  to  the  estab- 


SPECIAL  REVENUE  COMMISSION  51 

lishment  of  an  income  tax,  there  lias  usually  been  a  direct  ap- 
portionment of  a  share  of  the  state  receipts  to  the  local  author- 
ities. In  this  state  our  recommendation  of  the  exemption  of 
personal  propery  will  involve  no  considerable  sacrifices  to  the 
counties,  and  our  recommendation  that  no  offsets  be  permitted 
for  property  taxes  paid  safeguards  them  from  loss  on  that 
score.  On  the  whole  it  seems  to  us  the  most  simple  and  sensi- 
ble course  to  dedicate  the  yield  of  the  income  tax  to  the  state 
school  fund.  The  yield  will  certainly  not  be  more  than  suf- 
is  nourished  by  the  income  tax  the  tax  on  property  can  be 
supplied  from  the  property  tax.  This  fund  should  be  distri- 
buted to  the  localities  on  some  equitable  basis  and  insofar  as  it 
is  nourished  by  the  income  tax  the  tax  on  property  can  be 
reduced.  We  recommend  this  disposition  of  the  yield.  (For 
further  discussion  as  to  this  matter,  see  section  "Public,  Ele- 
mentary and  High  Schools.) 

Administration.  The  administration  of  the  state  income 
tax  should  be  vested  in  the  state  tax  commission  strengthened 
and  supplied  with  assistance  in  accordance  with  the  recom- 
mendations set  forth  in  detail  in  this  report.  (Page  29.) 

The  state  income  tax  law  of  1919,  which  is  still  in  force, 
names  the  state  treasurer  as  the  official  who  shall  administer 
the  law.  The  income  tax  bill  introduced  at  the  special  session 
does  the  same.  This  would  in  our  opinion  be  a  mistake.  In- 
quiries made  by  the  commission  at  the  hearings  elicited  no 
reasons  which  seemed  sound  and  sufficient  for  placing  the 
administration  in  the  hands  of  the  treasurer.  The  collections 
should  of  course,  be  paid  into  the  state  treasury,  but  the  fact 
that  property  taxes  are  not  actually  collected  by  the  state  tax 
commission  does  not  preclude  the  general  administration  of  the 
tax  being  placed  in  their  hands.  It  is  true  that  in  the  case  of 
the  income  tax  the  assessment  and  collection  can  be  conveni- 
ently made  simultaneous,  but  it  is  our  belief  that  it  would  be 
better  to  empower  the  proposed  district  assessors  to  accept 
checks  made  out  to  the  order  of  the  state  treasurer,  than  to 
authorize  the  state  treasurer  to  build  up  a  separate  force  of 
income  tax  assessors  and  auditors  to  perform  the  assessment 
functions.  Such  functions  properly  belong  to  the  taxing  author- 
ity, the  tax  commission  and,  contrary  to  the  opinion  expressed 
by  some  of  the  witnesses,  such  functions  in  the  case  of  an  in- 
come tax  are  very  material  ones.  An  examination  of  the  fed- 
eral law,  forms  and  regulations,  should  be  sufficient  to  demon- 
strate this  point.  However,  this  administrative  task  could  be 
performed  by  the  tax  commission,  as  reorganized  in  accord- 
ance with  our  suggestions,  at  very  slight  expense. 

The  administration  should  depend  as  fully  as  possible  upon 
the  federal  administration.    The  tax  is  a  light  one  whose  yield 


62  REPORT  OF  THE  NEW  MEXICO 

will  not  be  large.  Unless  there  existed  the  possibility  of  prac- 
tically adopting  the  federal  return  for  state  purposes,  we 
should  feel  that  the  administrative  difficulties  would  preclude 
the  establishment  of  a  state  income  tax  at  all  at  this  time.  We 
have  framed  our  suggestions  regarding  the  scope  and  charac- 
ter of  the  tax  so  as  to  reduce  to  a  minimum  the  adjustments 
which  would  have  to  be  made  in  the  federal  personal  return  on 
Form  1040  in  order  to  fit  it  for  use  as  a  state  return  and,  as 
has  been  pointed  out  above,  we  believe  that  the  adaptation  can 
be  made  through  use  of  a  short  schedule  of  scarcely  a  half- 
dozen  items  appended  to  a  duplicate  of  the  federal  returns. 

Lists  of  all  persons  submitting  an  income  tax  return  to  the 
national  government  are  posted  in  public  places  under  the  pro- 
visions of  the  Federal  Revenue  Act  of  1918  and  officers  of  a 
state  imposing  a  general  income  tax  may  secure  from  the 
Bureau  of  Internal  Revenue  information  concerning  the 
assessments  of  corporations  which  would  constitute  a  valuable 
check  both  upon  individual  returns  and  property  assessments. 
Taxpayers  should  be  compelled  to  give  notice  to  the  state  in 
case  additional  taxes  are  assessed  as  a  result  of  the  govern- 
ment check  on  returns.  This  would  give  the  state  the  ad- 
vantage of  the  expensive  federal  auditing  machinery. 

Above  all,  we  feel  that  the  state  income  tax  must  be  kept 
simple.  It  must  be  prevented  from  becoming  an  irritation  and 
nuisance  to  those  who  are  subject  to  its  provisions.  The  fed- 
eral income  tax  is  itself  maddeningly  complex  and  to  add  ma- 
terially to  its  complications  would  be  intolerable.  We  believe 
thai  if  our  suggestions  are  followed  the  taxpayer  will  have 
no  just  cause  for  complaint  in  this  direction.  It  will  only  be 
necessary  for  him  to  copy  the  figures  from  his  federal  return 
to  a  state  blank,  answer  the  few  specific  simple  questions  ap- 
pended and  mail  or  bring  his  return  and  check  to  the  dis- 
trict assessor  or  the  state  tax  commission. 

Exemption  of  Intangible  Personal  Property.  The  estab- 
lishment of  a  personal  income  tax  such  as  that  we  propose 
should  be  accompanied  by  the  passage  of  a  measure  entirely 
exempting  intangible  personal  property  such  as  stocks  and 
bonds,  mortgages  and  credits,  notes,  bills,  etc.,  from  taxation 
on  the  ad  valorem  basis.  In  the  presence  of  an  income  tax  the 
owner  of  such  intangibles  would  contribute  to  the  support 
of  the  state,  while  to  continue  to  attempt  to  list  intangibles 
and  subject  them  to  the  regular  rate  would  not  only  be  un- 
successful but  would  imperil  the  success  of  the  proposed  new 
income  tax  itself. 

(1)     As  has  been  pointed  olit    above  (1)  the  attempt  to 

(1)     Because  of  special  circumstances  the  present  method  of  tax- 
ing banlt  stocks  would  have  to  be  continued. 


SPECIAL  REVENUE  COMMISSION  53 

list  property  of  this  class  has  been  as  lamentable  a  failure  in 
this  state  as  it  has  been  elscAvhere.  In  1917  when  residents  of 
New  Mexico  reported  to  the  state  $1,328,897  as  the  total 
market  value  of  all  money,  notes  and  credits,  they  reported 
to  the  federal  government  $475,110  in  interest  and  $2,981,064 
in  dividends  (1).  Moreover  there  is  no  hope  of  reaching  such 
property  on  the  ad  valorem  basis.  Any  attempt  to  assess  it 
at  the  same  rate  as  other  property  is,  in  our  opinion,  fore- 
doomed to  fail.  In  some  states  the  taxation  of  such  property 
at  a  substantially  lower  rate  than  property  in  general, 
has  succeeded  in  bringing  a  considerable  portion  of 
it  to  light  but  the  plan  of  classification  involved  in  this 
proposal  appears  to  us  not  to  be  a  wise  one  to  adopt  in  the 
state.  While  the  yield  of  the  income  tax  together  with  the  in- 
creased revenues  resulting  from  our  other  suggestions  will, 
we  hope,  make  possible  a  considerable  decrease  in  the  rate  of 
the  tax  on  property  there  is  no  possibility  that  the  decrease 
will  be  great  enough  to  attract  the  listing  of  the  intangibles. 

•(2)  To  neglect  to  exempt  intangibles  would  seriously  en- 
danger the  success  of  the  income  tax.  A  discrepancy  between 
the  income  return  of  interest  received  and  the  property  re- 
turn of  intangibles  owned  would  give  ground  for  inquiries. 
Since  the  report  of  incomes  received  is  almost  as 'completely 
without  check  as  the  report  of  property  owned,  we  believe  the 
net  result  would  be  an  evasion  of  the  income  tax  as  complete  as 
the  present  evasion  of  the  intangible  personal  property  tax. 

(3)  The  tax  on  tangible  property  in  this  state  has  come 
to  be  an  impersonal  tax,  which  is  imposed  upon  the  total  value 
of  the  property  without  regard  to  individual  interests  in  that 
property.  No  deduction  is  allowed  because  of  debts  owed  by 
the  owner  of  the  tangible  property.  Such  offsets  may  be  made 
only  against  intangible  assets.  Consequently  insofar  as  these 
credits  are  secured  by  tangible  property  such  as  real  estate, 
livestock  and  other  chattels  within  the  state  their  exemption 
would,  on  the  whole,  be  desirable  rather  than  undesirable. 

(4)  The  income  from  these  intangibles  would,  of  course, 
be  subject  to  the  income  tax  at  the  regular  rates. 

While  we  have  no  serious  doubt  about  the  constitutional 
right  of  the  legislature  to  exempt  intangibles,  we  would  sug- 
gest that  in  order  to  isolate  the  risks,  the  exemption  be  es- 
tablished by  means  of  an  act  separate  from  the  proposed  in- 
come tax  act. 

Repeal  of  State  Income  Tax  Law  of  1919.  We  recommend 
the  immediate  repeal  of  the  state  income  tax  law  passed  in 
1919.  This  should  be  done  irrespective  of  the  decision  of  the 
legislature  regarding  our  proposal  for  the  establishment  of  a 
new  personal  income  tax  law.   

(1)     statistics  of  Income,  1917    (Washington,  1919)    p.  38. 


CHAPTER  IV. 

MINE  TAXATION. 

Page 

Geneval  policy : 55 

The  policy  of  subsidization 56 

The  policy  of  pealization  .- 57 

The  policy  of  equalization .58 

Present  practice 58 

Equity  of  the  present  mine  tax  ..."...: 62 

The  contiguous  property  clause 63 

Reserves  and  non-producing  mineral  lands 64 

Possibility  of  achieving  equity  through  product  taxes 66 

An  Ad  Valoren  system  the  best  solution 68 

Practicability  of  the  Ad  Valorem  assessment  of  mines 70 

Suspense  fund  71 

Taxation  of  oil  wells 72 

Specific  recommendations  72 


SPECIAL  REVENUE  COMMISSION  55 

CHAPTER  IV. 
MINE  TAXATION. 

General  Policy.  Before  any  conclusion  can  be  reached  as 
to  what  method  of  taxing  mines  is  desirable,  it  is  necessary 
to  agree  definitely  upon  the  end  to  be  sought.  It  is  futile  to 
attempt  to  find  an  equitable  method  until  there  is  agreement 
as  to  what  is  meant  by  equity.  When  one  comes  to  consider 
this  concept  of  equity  as  used  in  discussions  of  this  type,  one 
soon  discovers  that  it  means  all  things  to  all  men.  It  is  not  a 
pure,  abstract  and  absolute  standard  by  which  a  proposal  can 
be  tested  and  assayed.  With  each  individual  it  is  colored  by 
his  general  philosophy  and,  sadly  enough,  by  his  special  inter- 
ests. So,  too,  with  a  state  the  concept  of  equity  is  a  composite 
product,  profoundly  affected  by  such  factors  as  the  general  in- 
telligence, the  moral  standards  and  the  economic  interests  of 
the  people  of  the  state.  Thus  what  seems  equitable  in  one 
state  is  sometimes  denounced  as  grossly  inequitable  in  another 
where  different  conditions  prevail  and  two  systems,  each  of 
which  seems  eminently  fair  in  itself,  may  clash  violently  when 
there  is  a  necessity  for  interaction  between  them.  We  deem  it 
our  duty  to  attempt  to  appraise  the  various  proposals  for  tax- 
ing mines  from  the  point  of  view  of  the  state  as  a  whole,  tak- 
ing into  account  its  less  immediate  interests  as  well  as  those 
directly  involved,  and  also  remembering  the  necessity  of  con- 
sidering the  state  as  only  one  of  the  group  of  similar  common- 
wealths. 

Viewed  from  this  standpoint  there  appear  to  be  three  dis- 
tinct but  mutually  inconsistent  policies  which  are  accepted 
in  different  communities  as  equitable  and  fair  solutions  of  the 
mine  tax  problem.     They  are  : 

1.  The  policy  of  susidization,  or  the  favorable  treatment 
of  mining  as  compared  with  other  economic  interests 
in  the  community ; 

2.  The  policy  of  penalization,  or  the  comparatively  un- 
favorable treatment  of  mines,  and 

3.  The  policy  of  equalization,  or  the  attempt  to  place 
mines  on  precisely  the  same  plane  as  every  other  in- 
terest. 

It  then  becomes  our  task  to  form  a  judgment  as  to  which 
of  these  policies  is  most  equitable  under  the  conditions  ob- 
taining in  this  state.  AVe  realize  that  this  involves  an  interpre- 
tation of  the  sentiment  and  the  intei-ests  of  the  people  of  the 
state  but  we  believe  that,  in  spite  of  the  possibilities  of  error 
in  making  such  a  decision,  the  answer  to  the  problem  is  un- 
mistakably clear. 


56  REPORT  OF  THE  NEW  MEXICO 

The  Policy  of  Subsidization.  The  policy  of  subsidization 
might  conceivably  be  the  part  of  wisdom  under  such  conditions 
as  the  following: 

(a)  If  immediate  development  were  highly  desirable  for 
some  reason,  as  for  example,  extreme  difficulty  in 
financing  the  state  at  present  from  other  sources 
than  those  of  the  mines  which,  without  a  subsidy, 
would  not  be  developed  until  later.  It  is  obvious 
that  such  a  policy  of  living  on  the  future  would  or- 
dinarily prove  ruinous.  It  is  the  policy  of  a  des- 
perate bankrupt. 

(b)  If,  because  of  some  condition  such  as  heavy  subsidies 
offered  by  competing  states,  the  only  way  in  which 
development  could  be  secured  would  be  by  similar 
subsidies.  The  desirability  of  the  subsidy  policy 
Avould  even  then  be  an  open  question. 

(c)  If,  because  of  some  peculiar  local  condition,  a  larger 
preliminary  expenditure  had  to  be  made  or  a  larger 
initial  risk  assumed  by  a  mining  company  contem- 
plating development  in  this  state  than  would  be 
necessary  in  other  states.  However,  the  testimony 
at  the  hearings  shows  that  no  such  condition  exists 
in  this  state  and,  in  any  case,  this  is  a  situation  which 
would  probably  be  best  met  by  a  temporary  subsidy 
restricted  to  ncAV  developments. 

It  is  scarcely  conceivable  that  any  public  spirited  person 
should  take  the  view  that  mining  should  be  subsidized  except 
on  some  such  grounds  as  those  above  stated.  It  is  absurd  to 
pay  some  one  to-  extract  the  natural  resources  of  the  state  un- 
less some  benefit  accrues  to  the  state  either  directly  or  indi- 
rectly. There  is  no  gain  in  merely  stimulating  activity  by  arti- 
ficial methods  or  in  getting  rid  of  the  deposits  of  coal  and 
minerals. 

It  is  sometimes  forgotten,  moreover,  that  the  cost  of  a  sub- 
sidy is  borne  by  those  who  pay  higher  taxes  than  otherAvise,  as- 
.suming  no  shifting  of  the  tax,  of  course.  LoAver  taxes  for 
the  mines  mean  higher  taxes  for  real  estate,  cattle,  livestock 
and  business  generally.  It  is  the  owners  of  other  property 
who  pa}'  the  subsidy. 

It  is  our  impression  that  in  the  past  the  treatment  ac- 
corded the  mines  has  not  been  fully  appreciated  by  the  commu- 
nity in  general  and  that  the  apparent  concurrence  in  that  prin- 
ciple is  to  be  accounted  for,  not  on  the  ground  of  general  be 
lief  in  the  soundness  of  the  policy,  but  rather  on  the  grounds 
of  misunderstanding  and  inertia.     The  fact  that  mines  have 


SPECIAL  REVENUE  COMMISSION  57 

been  subject  to  the  same  rate  but  on  a  different  type  of  as- 
sessment base  has  undoubtedly  tended  to  create  an  appearance 
of  equality  where  none,  except  in  the  most  unusual  and  ex- 
treme case,  existed.  At  the  present  time  it  is  our  conviction 
that  a  policy  of  taxation  which  discriminates  in  favor  of  mines 
and  against  other  economic  interests  in  the  community  is  not 
considered  a  fair  and  equitable  policy. 

The  Policy  of  Penalization.  It  is  perhaps  unfair  to  the 
adherents  of  the  policy  described  by  this  phrase  to  use  the 
word  penalization.  What  is  meant,  of  course,  is  the  policy 
Avhich  calls  upon  the  mine  for  a  special  contribution,  heavier 
in  amount  than  that  asked  of  other  economic  interests.  To  the 
believer  in  this  policy  this  appears  not  to  be  a  penalization 
but  a  fair  exaction.  He  is  convinced  that  mines  are  an  emi- 
nently suitable  subject  for  special  taxation. 

This  policy  is  widely  accepted  by  other  nations.  In  this 
country  there  are  few  cases  of  its  application,  but  the  policy 
of  Minnesota  appears  to  be  in  conformity  with  it  to  some  de- 
gree. In  Great  Britain,  for  example,  evidences  of  it  are  to  be 
found  in  the  fact  that  no  deductions  are  permitted  for  deple- 
tion in  determining  profits  taxable  under  the  income  tax.  The 
non-allowance  of  depletion  has  the  effect  of  depressing  the 
selling  value  of  mining  properties,  which  effect  is  depended 
upon  to  bring  about  a  condition  of  equity.  Subsequent  pur- 
chasers (viz.,  those  who  have  purchased  after  the  imposition  of 
the  income  tax,)  allow  for  the  income  tax  in  fixing  the  sale 
price.  Moreover,  special  levies,  such  as  the  Mineral  Rights 
Duty  and  the  Excess  Mineral  Rights  Duty  are  imposed.  In 
many  other  foreign  countries  similar  practices  prevail.  The 
Mexican  tonnage  tax  rests,  for  whatever  justification  it  may 
have,  upon  this  philosophy. 

The  reasoning  lying  back  of  the  advocacy  of  the  policy 
of  penalization  appears  to  be  in  part  identical  with  that  lying 
behind  the  single-tax  proposal  for  the  taxation  of  the  econo- 
mic rent  of  land.  But  it  is  broader  than  that.  In  addition  to 
the  idea  that  the  value  owes  its  existence  in  large  measures  to 
the  community  rather  than  to  the  efforts  of  the  individual 
there  is  the  further  contention  that  in  taxing  mines,  one 
taxes  luck.  The  deposits  are  made  as  the  result  of  natural 
forces  and  somebody  finds  them ;  if  he  makes  a  lucky  find,  he 
should  share  his  riches  with  the  community  is  the  line  of  de- 
duction. Coupled  with  this  is  the  conventional  single-tax  ar- 
gument regarding  value  of  the  mine  due  to  favorable  relative 
location  with  reference  to  markets  which  the  owner  did  not 
ci'cate.  If  such  a  policy  is  accepted  as  equitable  and  desirable 
the  special  additional  tax  on  the  mines  over  and  above  the 


58  REPORT  OF  TH  ENEW  MEXICO 

ordinary  taxes  can  probably  best  be  imposed  in  the  form  of  a 
royalty  or  production  tax. 

We  are  certain,  however,  that  this  policy  of  penalizing,  at- 
tractive as  it  is  in  some  of  its  aspects  is  not  in  accord  with  the 
principles  now  generally  accepted  in  this  state.  There  is  no 
general  concurrence  in  the  philosophy  of  the  Single  Tax  and 
there  is  no  general  conviction  that  there  is  other  adequate 
ground  for  imposing  a  special  burden  on  the  mines. 

The  Policy  of  Equalization.  What  the  people  of  New 
Mexico  undoubtedly  demand  when  they  insist  upon  an  "equi- 
table" mine  tax  is  the  policy  of  placing  the  mining  industry 
on  precisely  the  same  basis  as  the  other  economic  interests  of 
the  state.  The  mine  representatives  themselves  avow  that  they 
seek  no  preferential  treatment,  and  defend  the  present  method 
of  taxing  mines  on  the  ground  that  it  achieves  equality  of  treat- 
ment. We  believe,  then,  that  we  can  assume  practically  united 
support  for  the  view  that  we  should  seek  a  solution  of  the  mine 
tax  problem  which  will  result  in  placing  the  mines  in  the 
same  position  as  other  interests,  not  in  a  better  or  a  worse 
position.  The  real  difficulties  arise,  of  course,  when  one  at- 
tempts to  construct  a  practical  plan  for  bringing  this  about 
but  by  clearly  defining  our  object,  the  plan  we  suggest  will  at 
least  be  better  understood  and  may  be  spared  the  criticism 
which  springs  from  a  mif?understanding  of  its  aim  and  in- 
tention. 

Present  Practice.     The  state  constitution  declares  that: 
"taxes  levied  upon  tangible  property  shall  be  in  propor- 
tion to  the  value  thereof,  and  taxes  shall  be  equal  and 
uniform  upon  subjects  of  taxation  of  the  same  class." 
(Art.  YIII,  Sec.  1.) 

The  taxes  levied  on  mines  are  certainly  "taxes  levied  on 
tangible  property."  In  order  to  meet  the  constitutional  re- 
quirement that  "taxes  shall  be  equal  and  uniform  upon  sub- 
jects of  the  same  class"  it  is  apparent  that  taxation  in  prac- 
tice must  result  in  a  burden  on  mine  property  which  corres- 
ponds as  closely  as  possible  to  the  burdens  imposed  on  other 
tangible  property  of  the  same  value. 

The  general  statute  governing  the  imposition  of  taxes  pre- 
scribe that  "all  property,  real  and  personal,  in  this  state,  shall 
be  subject  to  taxation"  with  certain  specific  constitutional 
and  statutory  exceptions  (1).  A  statute  passed  in  1915  (2), 
however,    established    a    special    method    of   arriving    at   the 

(1)  Cap.  evil,  5427. 

(2)  Laws  1915,  Chap.  55. 


SPECIAL  REVENUE  COMMISSION  59 

assessed  value  of  productive  mines  and  mineral  lands.  The 
method  then  established,  as  modified  in  1919  (1)  is  the  source 
of  most  of  the  criticism  of  mine  taxation  which  has  arisen 
in  this  state.  The  1915  law  defines  "productive  mines  and 
mineral  lands"  to  be  "such  as  are  mined  in  good  faith  for 
the  mineral  values  thereof,  with  a  fair  degree  of  continuity 
throughout  the  year  for  which  the  same  are  assessed  and  on  a 
scale  reasonably  commensurate  with  the  opportunity  and  dif- 
ficulty of  disposing  of  the  product  thereof  (2). 

All  other  mines,  mining  claims  and  mineral  lands,  are 
classed  as  "non-productive  mines  and  mineral  lands"  and  their 
property  is  assessed  by  the  local  assessors.  This  property  may 
consist  of :  (1)  lands,  surface  and  mineral  rights  owned  in  fee, 
(2)  mineral  rights  and  (3)  improvements,  mining  plant,  ma- 
chinery, houses,  etc. 

The  gist  of  the  difference  between  the  method  of  taxing 
a  productive  and  a  non-productive  mine  is  found  in  Section  4 
of  the  act  which  in  the  case  of  a  productive  mine  substitutes 
for  the  assessor's  valuation  of  mineral  content  (whether  in 
lands  owned  in  fee  or  in  lands  controlled  through  ownership 
of  mineral  rights)  a  figure  known  as  the  net  output  of  the 
the  mine.  This  item  is  accepted  in  lieu  of  the  assessor's  valu- 
ation of  all  mineral  values  in  such  mine  and  in  all  lands  con- 
tiguous "held  or  owned  in  the  same  right".  As  this  is  the 
precise  objective  of  the  public  criticism  now  being  so  actively 
urged  against  the  mine-tax  law  it  is  worth  while  to  quote  the 
entire  section  verbatim. 

"Section  4.  The  State  Tax  Commission  must  at  its 
meeting  commencing  on  the  first  Monday  of  February, 
from  such  statement  or  other  information  as  it  can  pro- 
cure, determine  the  net  value  in  dollars  of  the  output  of 
each  of  such  mines  during  the  previous  calendar  year, 
and  before  the  first  Monday  of  March,  certify  such  valua- 
tion thereof  to  the  board  of  county  commissioners  of  the 
counties  in  which  such  mines  are  respectively  situated, 
and  the  amount  of  said  valuation  shall  be  taken  and  con-, 
sidered  and  assessed  in  lieu  of  the  assessable  value  of  the 
mineral  in  such  mine,  mining  claim  or  claims,  or  mineral 
jand  from  which,  or  any  portion  of  which,  such  minerals 
shall  have  been  extracted  and  also  in  lieu  of  the  mineral 
values  in  any  and  all  other  contiguous  lands  held  or  owned 
in  the  same  right  by  the  person  or  corporation  so  taxed 
for  the  future  extension  of  such  mining  operation  thereto. 


(1)  Laws  1919,  Chap.  61. 

(2)  Laws  1915,  Chap.  55,  Sec.  1. 


6(1  REPORT  OF  THE  NEW  MEXICO 

« 

and  such  not  value  of  said  mineral  so  extracted  shall  be 
taxed  at  the  same  rate  as  other  properties  are  taxed  in 
the  county  and  other  subdivision  in  which  such  mine  is 
situated  and  the  taxes  levied  therein  shall  be  considered 
as  taxes  upon  such  mineral  values  in  said  lands." 

The  item  described  as  "the  net  value  in  dollars  of  the 
output"  approximates  what  is  known  among  metal  miners 
as  the  smelter  value".  The  definition  of  net  value  appears 
to  have  been  copied  from  the  Colorado  statute  but  whereas 
the  Colorado  statute  is  restricted  in  application  to  metal  mines 
our  statute  applies  to  coal  mines  as  well  and  whereas  the 
Colorado  statute  has  a  saving  clause  which  substitutes  one- 
fourth  of  the  gross  value  for  the  net  when  the  net  is  smaller 
than  that  amount,  our  statute  uses  the  net  alone  no  matter 
how  small  that  net  has  been.  Incidentally  whatever  virtue 
the  Colorado  precedent  may  have  been  supposed  to  possess  has 
now  disappeared,  for  even  with  their  more  stringent  statute 
the  conviction  appears  to  be  rapidly  gaining  ground  in  Colo- 
rado that  their  system  operates  as  a  subsidy  to  the  mining 
interests  and  an  official  committee  under  the  chairmanship 
of  Mr.  Celsus  P.  Link,  of  the  Colorado  State  Tax  Commission, 
is  now  considering  the  whole  question  of  reform  of  their  mine- 
tax  law.  The  Colorado  State  Tax  Commission  has  placed  itself 
on  record  in  favor  of  an  ad  valorem  system  of  mine  taxation  in 
the  following  unequivocal  language: 

"This  Commission  has  consistently  and  persistently 
urged  that  metalliferous  mining  property  should  be 
assessed  at  its  actual  value  and  not  practically  subsidized 
as  at  present  under  existing  laws.  It  is  interesting  to 
note  in  this  connection  the  movement  which  has  recently 
been  inaugurated  by  the  Colorado  State  Association  of 
County  Commissioners  to  amend  this  law  by  an  initiated 
measure  if  necessary." — Report  Colorado  State  Tax  Com- 
mission for  year  1919,  page  6. 

The  exact  definition  of  "net  value"  of  mineral  output  as 
given  in  our  law  is  as  follows: 

"the  difference  between  the  actual  cost  of  production, 
transportation,  treatment,  shipment  and  sale  of  same,  in- 
cluding coke  made  from  coal,  and  the  amount  realized  if 
sold,  or  which  could  be  realized  at  the  time  of  making 
such  report  by  the  sale  of  the  same,  not  to  be  less,  how- 
ever, in  either  event  than  the  true  market  value  there- 
of." (1) 


(1)     Laws  1915,  Chap.  55. 


SPECIAL  REVENUE  COMMISSION  61 

The  law  also  carefully  provides  for  the  exclusion  of  ex- 
penditures on  capital  account. 

A  temporary  modification  was  made  in  1919  (1)  under 
the  terms  of  which  the  net  values  for  the  years  1919  and  1920 
Avere  taken  to  be  the  "average  net  value  in  dollars  of  each 
producing  mine  .  .  .  for  the  years  1916,  1917  and  1918."  There 
were  several  provisos,  the  most  important  of  Avhicli  substituted 
the  net  value  of  the  current  year  in  case  that  item  were  larger 
than  the  three-year  average. 

It  should  be  particularly  noted  that  the  limitations  upon 
the  extent  to  which  a  mine  must  be  operated  in  order  to 
classify  it  as  a  productive  mine  are  couched  in  general  terms 
so  that  it  is  quite  possible  for  a  mine  to  retain  its  classi- 
fication as  a  productive  mine  even  when  it  shows  no  "net 
value."  In  such  a  ease  its  valuation  of  mineral  value  would 
be  nil  and  it  would  plainly  be  to  its  advantage  to  continue  to 
operate  at  a  loss  indefinitely  so  long  as  that  loss  is  less  than 
its  taxes  would  be  on  the  mineral  content  of  the  mine  and  of 
all  its  contiguous  lands. 

It  is  apparent  from  what  has  been  said  that  the  item  of 
"net  value"  is  a  very  different  figure  from  the  item  of  "net 
income"  as  used  for  purposes  of  the  federal  income  tax,  for 
in  arriving  at  the  latter  figure  full  deductions  are  allowed  for 
such  items  as  depletion  and  plant  depreciation.  However, 
the  mere  fact  that  a  mine  may  have  a  "net  value  of  mineral 
output"  and  still  have  no  "net  income,"  paying  a  state  tax 
when  it  has  no  federal  income  tax  to  pay  is,  in  spite  of  the 
assertions  of  some  of  the  witnesses  representing  the  mines,  no 
indication  at  all  of  the  equity  or  inequity  of  the  state  mine 
tax.  It  is  only  when  the  results  of  the  state  mine  tax  are  com- 
pared with  the  state  tax  on  property  in  general  that  any  con- 
clusion can  be  drawn  as  to  relative  equality. 

It  is  considered  unnecessary  to  present  statistics  here 
showing  the  taxes  paid  by  the  mines  before  and  after  the 
passage  of  the  1915  law  or  showing  the  relative  share  of  the 
state's  tax  burden  borne  now  as  formerly  by  the  mines.  Such 
figures  appear  to  us  to  be  entirely  beside  the  main  point  and 
likely  to  divert  attention  from  the  real  issue  which,  as  we  con- 
ceive it,  is  merely  this :  Is  the  present  method  of  valuing  mines 
the  best  practical  way  of  arriving  at  "the  value  thereof"  as 
prescribed  in  the  state  constitution,  and  does  or  can  that 
method  result  in  a  tax  which  is  "equal  and  uniform"  as  com- 
pared with  the  taxes  levied  on  other  classes  of  tangible  prop- 
erty? 

(1)     Laws  1919,  Chap.  61. 


62  REPORT  OF  THE  NEW  MEXICO 

Equity  of  The  Present  Mine  Tax.  The  question  of  the 
equity  of  the  mine  tax  on  productive  mines  can  be  reduced 
to  these  terms:  Is  the  value  of  a  mine  (including  the  value 
of  all  mineral  deposits)  equal  to  the  value  of  the  mine  plant 
(machinery,  etc.)  plus  the  net  product  as  defined  in  the  law? 
The  surface  value  of  the  land  underlaid  with  mineral  can  be 
ignored  as  the  value  is  independent  of  and  not  affected  by  the 
mining  operations. 

First  of  all  it  should  be  frankly  recognized  that  the  value 
of  a  mining  plant  is  directly  dependent  upon  the  presence  of  an 
economically  profitable  mineral  deposit,  and  if  for  any  reason 
that  deposit  fails  to  materialize  or  disappears,  the  value  of 
the  plant  drops  to  scrap,  usually  a  small  fraction  of  its  pur- 
chase price.  Under  the  assessment  system  now  in  force  in  this 
state  these  plant  values,  even  in  the  case  of  a  productive  mine, 
are  assessed  by  the  local  assessor  and  their  assessed  value  con- 
stitutes an  irreducible  minimum  below  Avhich  the  assessment  of 
the  mine  cannot  fall,  no  matter  how  low  the  "net  product" 
may  decline.  This  is  a  fact  that  is  often  lost  sight  of  in  the 
public  discussions  of  the  problem.  But,  nevertheless,  this  is 
a  minor  factor  in  the  case  of  most  mines.  It  is  true^that 
usually  the  largest  portion  of  the  property  of  a  mine  fails 
to  be  valued  under  our  system  by  identifying  the  value  of  that 
portion  with  the  value  of  the  net  product  of  a  single  year.  (1) 

Any  one  who  undertakes  to  defend  the  equity  of  the  pres- 
ent arrangement  (defining  equity  as  equality  and  uniformity 
as  prescribed  by  the  state  constitution)  must  take  the  position 
that  either  from  year  to  year  or  in  the  long  run  the  net  pro- 
duct of  single  year  added  to  the  value  of  the  improvements 
results  in  a  figure  Avhich  approximates  the  total  value  of  the 
mine.  There  is  no  other  defense  without  a  shifting  of  ground, 
such  as  a  plea  for  relatively  favorable  treatment  because  of 
special  risks  or  special  economic  deserts. 

So  far  as  the  contention  rests  on  the  year-to-year  basis  it 
is  apparent  that  the  net  product  of  one  single  year  is  an  arbi- 
trary, uncertain  and  hapazard  factor  on  which  to  rest  a  valu- 
ation of  a  mining  property.  It  is  little  short  of  ridiculous 
to  assume,  as  this  method  does  tacitly  assume,  that  capital 
values  fluctuate  as  rapidly  and  violently  as  the  net  earnings 
of  the  operations  of  individual  years.  "Who  would  seriously 
maintain  for  example,  that  the  market  value  of  a  coal  property 
with  vast  reserves  sinks  to  zero  whenever  there  is  no  net 
profit  as  the  result  of  a  single  year's  operations?    Moreover, 


(1)     Or,  as  in  the  case  in  1919  and  1920,  with  the  three-year  aver- 
age described  above. 


SPECIAL  REVENUE  COMMISSION  63 

who  could  successfully  support  the  proposition  that  the  market 
price  of  such  a  property  with  unlimited  reserves  will,  with  any 
degree  of  regularity  equal  the  net  product  of  any  one  year 
no  matter  how  prosperous.  Yet  that  is  practically  the  theory 
which  underlies  the  present  statute  except  insofar  as  the  assess- 
ment of  improvements  enters  as  a  factor  to  affect  the  result. 

Even  the  proposition  that  in  the  long  run  equality  is  ap- 
proximated under  this  system  is  equally  as  difficult  to  main- 
tain. Except  insofar  as  the  iinprovements  may  be  assessed  at 
a  lower  figure  than  would  he  the  case  if  the  expected  life  of 
the  mine  were  long,  this  proposition  holds  true — that  two 
properties  in  all  other  respects  equal,  would  receive  the  same 
a.ssessment  because  of  their  equal  net  products,  even  though 
one  was  on  the  point  of  exhaustion  and  the  other  had  mineral 
reserves  sufficient  for  a  fifty-year  life.  A  mine  on  the  point  of 
exhaustion  would,  of  course,  have  a  selling  value  which  might 
closely  approximate  the  net  product  of  one  year,  but  as  one 
considers  successive  properties  with  larger  and  larger  reserves 
it  becomes  evident  that  dependence  upon  the  valuation  of  im- 
provements to  supplement  the  net  product  to  an  extent  which 
will  bring  about  equality  becomes  more  and  more  ridiculous 
as  the  expected  life  of  the  m.ine  increases. 

However,  the  discussion  of  equity  does  not  need  to  be  con- 
fined to  questions  as  to  what  might  be  expected  to  occur  under 
suppositious  conditions.  The  inadequacy  of  the  present  method 
of  taxing  mines  is  admitted  even  by  those  who  benefit  from 
the  arrangement,  the  admission  being  in  some  cases  open  and 
frank  and  in  some  cases  tacit  and  indirect.  At  this  very  time 
llie  state  tax  commission  is  confronted  with  the  necessity  of 
attempting  by  means  of  varying  the  assessed  values  of  the  un- 
operated  coal  reserves  to  eliminate  discriminations  whose  caus- 
es lie  deep  in  the  net-product  method  of  taxing  operated  mines. 
The  whole  system  is  inexact  and  arbitrary  as  a  method  of 
arriving  at  market  value.  It  is  inequitable  both  as  between 
mines  as  a  class  and  other  property  and  between  different 
mining  properties  within  the  class.  We  are  convinced  that  the 
chiel  reason  for  its  continuance  thus  far  is  the  realization 
among  the  mining  men  that  the  mining  property  most  dis- 
criminated against  as  compared  with  other  mining  properties 
is  itself  in  no  unfavorable  position  as  compared  with  property 
in  general. 

Contignous  Property  Clause.  That  section  of  the  law 
which  taxes  the  mineral  values  of  contiguous  property  on  the 
basis  of  an  assessment  of  the  annual  net  product  of  a  pro- 
ducing mine  is  quoted  in  full  on  page  59.  At  the  risk  of 
being  (charged  with  substituting  assertion  for  argument  we 
shall  dispose  of  this  matter  in  a  very  summary  fashion.     As 


64  REPORT  OF  THE  NEW  MEXICO 

inliTprotod  by  the  State  Tax  Commission,  an  interpretation 
wliieli  is  certainly  literal  and  probably  correct,  there  is  no 
limitation  upon  the  quantity  of  mineral  content  which  can  be 
covered  by  the  net  output  of  one  producing  mine  except  that 
it  must  (1)  be  "held  or  owned  in  the  same  right"  and  it  must 
be  (2)  in  land  "contiguous"  to  the  land  on  which  operations 
are  being  carried  on.  Physical,  engineering  or  economic  ob- 
stacles which  may  absolutely  preclude  the  utilization  of  such 
mineral  deposits  through  the  extension  of  the  existing  mining 
operations  are  entirely  ignored. 

In  our  opinion  this  contiguous  property  clause  exaggerates 
materially  every  inequality  which  exists  in  the  net-product 
method  of  taxing  mines,  tjnder  its  ample  cloak  considerable 
values  have  undoubtedly  been  able  to  hide.  Its  operation  has 
resulted  in  a  discrimination  in  favor  of  the  mine  with  vast 
reserves  and  against  the  mine  with  reasonable  reserves.  It 
l.as  probably  resulted  in  discrimination  against  metalliferous 
and  in  favor  of  coal  mines.  It  has  encouraged  the  speculative 
holding  ci  natural  resources  by  radically  reducing  the  carrying 
charges  on  such  property.  In  our  opinion  a  contiguous  prop- 
erty clause  never  had  an  adequate  excuse  for  existence  and  we 
recommend  that,  whatever  method  of  taxing  mines  is  adopted, 
only  such  reserves  shall  be  allocated  to  producing  mines  as 
are  reasonable  from  an  engineering  and  economic  point  of 
^'iew. 

Reserves  and  Non-Producing-  Mineral  Lands.  In  a  state 
which  is  in  the  stage  of  development  of  New  Mexico  the  tax- 
ation of  non-producing  property  is  always  a  problem  of  prime 
importance.  Seldom  does  one  find  a  normal  correspondence 
between  current  income  and  sales  values.  The  entire  com- 
munity is  playing  for  a  future  rise  in  market  values.  The 
property  tax,  in  effect,  makes  the  announcement  that  contri- 
butions toward  the  support  of  government  will  be  collected  in 
proportion  to  the  present  value  of  each  man's  interest  in  the 
future  wealth  of  the  country  or,  to  phrase  it  another  way,  the 
state  demands  that  every  player  in  the  game  pay  a  fee  to 
continue  to  hold  legal  title  to  his  gamble,  which  fee  shall  be 
ill  proportion  to  the  present  value  of  his  prospective  winnings. 
This  system  of  taxation  has  the  great  advantage  of  being  able 
to  utilize  the  hopes  and  dreams  of  future  wealth  as  a  force 
for  the  collection  of  taxes  during  a  stage  when  there  is  rela- 
tively little  in  the  May  of  actually  realized  income  upon  which 
to  draw.  But  to  make  the  arrangement  a  fair  one  it  is  ob- 
viously necessary  that  all  players  be  admitted  on  the  same 
terms  so  far  as  the  fees  are  concerned. 

O-vmrrship  of  an  undeveloped  mineral  tract  is  fundamen- 
tally ."Similar  to  the  ownership  of  a  vacant  lot  and  the  principle 


SPECIAL  REVENUE  COMMISSION  65 

to  be  app]ied  in  taxing  both  is  precisely  the  same.  In  practice, 
however,  the  present  value  of  the  city  lot  is  usually  fairly  easy 
to  determine  because  of  the  fact  that  other  lots  similarly  sit- 
uated and  substantially  identical  are  often  changing  hands  so 
that  there  is  the  final  test  of  a  market  price  of  a  similar  unit 
almost' always  available.  Such  a  check  is  often  completely  ab- 
sent in  the  case  of  undeveloped  mineral  reserves.  The  tracts 
themselves  are  often  very  large  and  the  number  of  possible 
purchasers  small  on  that  account.  The  presence  of  minerals 
is  often  problematical  and  there  are  uncertainties  regarding 
transportation  and  market  developments.  In  the  absence  of 
active  market  quotations  the  valuation  of  such  properties  pre- 
sents obvious  difficulties  and  when  there  are  uncertainties  the 
wise  assessor  values  conservatively.  On  the  other  hand  it  is 
by  no  means  true  that  because  future  gains  are  uncertain  they 
should  be  completely  ignored.  Unless  the  risk  factor  is  100 
per  cent  every  chance  of  a  future  gain  will  reflect  itself  to 
some  degree  in  the  present  market  value. 

The  valuation  of  mineral  reserves  connected  with  an  oper- 
ating mine  usually  offers  no  serious  difficulties  in  mines  such 
as  those  most  common  in  New  Mexico.  Sufficient  reserves 
from  an  economical  unit  should  be  allocated  to  each  mining 
operation  and  the  mineral  content  valued  by  a  method  which 
apportions  reserves  over  the  estimated  life  of  the  mine. 
But  to  insist  that  because  these  active  reserve  values  have  been 
given  to  tJie  assessor  no  account  at  all  shall  be  taken  of  the 
mineral  coiilent  of  other  lands  which  a  company  may  own  ap- 
pears to  us  to  be  entirely  unjustifiable.  Assume  for  example, 
the  economical  mining  unit  is  ten  thousand  acres  and  that  a 
company  ov/ns  ten  such  tracts  on  only  two  of  which  active 
mining  operations  are  proceeding.  If  the  market  holds  any 
prospect  of  expansion  whatsoever  it  is  evident  that  the  third 
tract  will  have  a  value  larger  than  that  which  would  be  im 
puted  to  it  on  the  assumption  that  it  woYild  become  economi- 
cally available  only  after  the  first  two  tracts  are  completely 
cxhaupled.  A  market  expanding  at  a  very  moderate  rate  will 
ripen  the  value  of  these  undeveloped  tracts  with  remarkable 
rapidity.  Thus  if  the  market  for  coal  is  expanding  ten  per 
cent  annually  and  if  the  company  secures  its  proportionate 
share  of  the  increased  business  a  very  simple  calculation  will 
show  it  will  only  be  sixteen  years  before  all  ten  of  the  tracts 
will  have  to  be  operated  to  supply  their  demand. 

In  our  opinion  the  only  proper  way  to  arrive  at  valuations 
of  mineral  reserves  is  to  vest  the  State  Tax  Connnission  with 
power  to  fix  the  values  and  to  provide  them  with  professional 
assistance.  Any  attempt  to  impose  arbitrary  limitations  is 
apt  to   result  in   under-assessment   and   is   certain   to   result 


66  REPORT  OF  THE  NEW  MEXICO 

in  inequality.  In  case  of  over-assessment  there  is  always  resort 
to  the  courts  and  since  properties  of  this  type  are  usually 
hehl  in  large  blocks  that  resort  will  not  be  closed  because  of 
the  expense  of  appeals  being  out  of  proportion  to  the  amounts 
involved.  If  such  reserves  have  a  present  value  it  should  be 
taxed  and  the  only  way  to  arrive  at  a  valuation  is  to  give  to 
some  agency  of  the  state  power  to  make  it  and  to  provide 
the  assistance  necessary  to  secure  the  data  on  which  an  intelli- 
gent assessement  may  be  based. 

Possibility  of  Achieving  Eqliity  Through  Product  Taxes. 
The  ])resent  inethod  of  taxing  mines  depends  upon  a  product 
tax  to  equalize  the  burden  ui)on  mines  as  compared  with  other 
real  estate.  In  our  opinion  it  does  not  accomplish  this.  The 
question,  however,  arises  as  to  the  possibility  of  achieving 
equity  through  some  modification  of  the  output  tax. 

The  fundamental  advantage  possessed  by  the  man  in  a 
gro'wdng  community  such  as  this  who  is  taxed  on  an  income 
basis,  as  compared  Avith  a  man  who  is  taxed  on  a  capital  basis 
has  already  been  pointed  out.  If  conditions  were  perfectly 
static,  instead  of  being  intensely  dynamic,  if  every  investment 
yielded  its  five  per  cent  and  if  an  investment  could  not  be 
expected  to  increase  or  decrease  in  value,  a  tax  on  income 
could  be  easily  equated  Avith  a  tax  on  capital  value.  The 
equation  would  simply  be : 

100 

Property  tax  rate  X =income  tax  rate. 

current  interest  rate 

Assuming  a  property  tax  rate  of  two  percent  and  the 
interest  rate  five  per  cent,  the  equation  would  read: 

100 

.02  X  =.40 

.05 

In  other  words  a  two  per  cent  property  tax  would  be 
equivalent  to  a  forty  per  cent  income  tax. 

However,  the  task  of  equalizing  the  two  taxes  becomes 
complicated  as  soon  as  one  substitutes  the  assumption  of  dy- 
namic conditions  in  place  of  the  static  and  the  signifieant 
point  is  that  the  complications  are  due  to  the  very  factors 
which  make  the  valuation  of  mines  on  the  capital  basis  a  dif- 
ficult matter.  In  other  words,  if  one  had  the  data  which 
would  be  necessary  to  equalize  the  product  or  income  tax 
with  a  property  tax  under  conditions  as  they  actually  exist, 


SPECIAL  REVENUE  COMMISSION  67 

he  would  also  have  the  data  for  establishing  an  accurate 
assessment  on  the  capital  basis. 

In  the  first  place  any  serious  attempt  to  equalize  the  two 
tax  burdens  must  utilize  the  tiiie  net  income  of  a  mine  and 
not  the  gross  output,  ''net  product"  or  any  other  arbitrary 
approximation  of  that  figure. 

The  "spread"  between  gross  income  and  net  income  varies 
■widely  between  a  prohyry  mine  and  a  metal  mine  of  the  other 
types,  between  coal  mines  and  metal  mines,  and  between  mines 
of  the  same  general  type  operating  under  different  conditions. 
The  use  of  any  other  factor  than  the  final  net  gain  on  the 
operation  would  inevitably  involve  serious  discriminations  as 
between  the  mines  themselves. 

Again  the  element  of  risk  enters  as  a  disturbing  factor. 
Risk  is  taken  into  account  in  arriving  at  the  capital  value  of 
a  piece  of  vacant  real  estate  taxed  under  the  property  tax. 
It  would  also  have  to  be  taken  into  account  in  arriving  at  the 
net  income  of  a  mine.  The  forty  per  cent  income  tax  rate  ar- 
rived at  as  the  equivalent  of  a  two  per  cent  property  tax  rate 
could  be  applied  only  to  an  item  of  pure  net  income  from  which 
all  return  for  risk  (really  insurance  premiums)  had  been  elim- 
inated. If  half  of  the  so-called  profits  were  really  a  return 
for  risk  the  forty  per  cent  rate  would  have  to  be  cut  to  20  per 
cent.  The  net  income  taxed  under  the  federal  income  tax 
returns  contains  a  substantial  element  of  this  return  for  risk. 
Depletion  may  be  deducted  but  those  allowances  are  them- 
selves based  upon  estimates  as  to  the  mineral  content  of  the 
mines  which  may  or  may  not  be  accurate.  The  only  way  to 
eliminate  the  risk  factor  entirely  would  be  to  prescribe  the 
full  repayment  of  the  entire  capital  investment  before  any 
of  the  return  was  termed  income.  This  would  obviously  be  a 
ridiculous  procedure  for  tax  purposes,  especially  in  a  case 
where  there  were  large  capital  investments  in  reserves.  The 
only  alternative  procedure  would  be  to  qualify  the  rate  on  each 
mine  in  accordance  with  the  size  of  the  risk  factor  involved, 
but  to  make  an  accurate  qualification  one  would  require  the 
very  information  regarding  mineral  content,  etc.,  whose  diffi- 
culty of  attainment  forms  the  basis  of  the  objection  to  capital 
valuations. 

In  the  next  place  the  rate  would  have  to  be  qualified  in 
order  to  compensate  the  owner  of  the  vacant  lot  for  the  dis- 
advantage he  endures  by  being  asked  to  pay  in  advance  on  the 
basis  of  expected  incomes — when  the  mine  owner  is  only  called 
upon  for  taxes  if  and  when  he  realizes  a  net  income.  The  dif- 
ficulty of  calculating  such  a  qualification  is  obvious. 

Moreover,  if,  under  an  income  tax  on  mines  depletion  al- 
lowances were  to  be  permitted  on  a  basis  of  cost  or  investment, 


68  REPORT  OF  THE  NEW  MEXICO 

the  State  would  be  justified,  under  accepted  income-tax  theory, 
in  taxing  a  Kseller  of  a  mine  upon  any  gain  realized  by  him  on 
the  sale.  TloAvevor,  if  the  owner  of  a  mine  chose  to  move  away 
from  the  state  just  before  the  sale  there  would  be  no  way  to 
reach  that  gain.  The  situation  might  possibly  be  met  by  re- 
fusing to  recognize  a  new  basis  for  depletion  in  cases  of  sales 
where  the  profits  were  not  made  subject  to  the  state  income 
tax  in  which  case  the  mine  would  sell  for  less  and  pay  higher 
taxes  in  the  future,  but  such  a  procedure  would  result  in  one 
mine  owner  paying  taxes  on  a  different  basis  from  another. 

On  the  Avhole,  even  if  we  w^ere  disposed  to  admit  the  prac- 
ticability of  dependence  upon  some  form  of  product  tax  to 
obtain  the  equitable  taxation  of  mines  (and  we  do  not  find 
ourselve>s  able  to  admit  it)  we  would  nevertheless  be  inclined 
favor  the  ad  valorem  basis  as  preferable  because,  after  all  is 
said  and  done,  this  is  the  basis  used  in  the  case  of  property 
generally  and  no  matter  how  carefully  the  output  tax  were 
synchronized  and  adjusted  the  suspicion  would  still  lurk  in 
the  public  mind  that  inequality  existed.  We  believe  that  it  is 
a  desirable  thing  in  itself  to  dispel  this  distrust  and  especially 
is  it  desirable  to  do  so  when  the  method  which  will  accom- 
1)1  ish  this  appears  to  us  superior  on  other  grounds. 

It  is  evident  that  any  attempt  to  achieve  equity  between 
mines  taxed  on  an  income  or  product  basis  and  other  real  es- 
state  taxed  on  the  basis  of  capital' values  is  one  which  involves 
the  same  difficulties  as  the  attempt  to  establish  a  capital  valu- 
ation and  would  encounter  others  in  addition.  In  fact  such  a 
task  seems  to  us  to  be  an  impossible  one  and  our  inquiries  at 
the  hearings  plainly  show  that  this  conclusion  is  concurred  in 
by  the  mining  men  themselves.  (1) 

An  Ad  Valorem  System  The  Best  Solution.  It  seems  to  us 
to  be  clear  both  that  the  present  method  of  taxing  mines  is 
grossly  inequitable  and  that  there  is  no  possibility  of  evolving 
any  type  of  product  tax  which  we  can  confidently  recommend 
as  reasonably  certain  to  correct  the  situation.  This  leads  us 
to  the  consideration  of  the  ad  valorem  method,  the  method 
used  in  taxing  property  generally  in  this  state. 

Qualified  students  of  taxation  have  long  appreciated  the 
theoretical  advantages  of  the  ad  valorem  system  of  mine  tax- 
ation, but  until  recently  they  have  been  inclined  to  accept  the 
position  that  the  technical  problem  of  arriving  at  a  valuation 
was  an  insuperable  one.  The  ad  valorem  tax  was  recognized 
as  the  only  scientific  one  if  the  mine  tax  was  to  form  a  part 
of  a  system  of  property  taxation,  but  it  was  considered  im- 
possible   of  realization.     Recently  there   has   been   a   radical 

(1)     See  pp.  84-85,  Report  of  Hearings. 


SPECIAL,  REVENUE  COMMISSION  69 

change  of  attitude.  It  is  a  change  comparable  to  that  which 
has  taken  place  with  reference  to  the  state  income  tax.  Be- 
fore 1911  almost  every  tax  student  considered  a  state  income 
tax  desirable  but  unattainable.  In  that  year  Wisconsin  proved 
its  practicability  and  the  rapid  spread  of  income  taxation 
throughout  the  United  States  is  directly  traceable  to  that 
demonstration.  Similarly  the  establishment  in  several  states  of 
the  feasibility  of  the  ad  valorem  taxation  of  mines  under  prop- 
er administration  bids  fair  to  initiate  a  sweeping  movement  in 
the  direction  of  its  general  adopton. 

The  commission  had  decided  to  recommend  the  adoption 
of  the  ad  valorem  method  before  it  was  informed  that  the  re- 
port of  the  special  committee  on  mines  taxation  of  the  National 
Tax  Association  iirged  the  adoption  of  this  method.  Its  report 
which  was  made  to  the  Thirteenth  Annual  Conference  Meeting 
at  Salt  Lake  City,  September  6th-10th,  1920,  is  such  an  illumi- 
nating discussion  of  the  whole  problem  that  we  have  consid- 
ered it  desirable  to  reprint  it  as  an  appendix  to  our  report, 
and  it  is  to  be  found  in  Appendix  III.  We  subscribe  heartily 
to  the  reasoning  and  the  conclusions  of  that  report  and  recom- 
mend that  it  be  read  in  connection  with  this  section.  We  agree 
that  "the  tax  based  on  value  takes  into  consideration  all  the 
elements  that  give  value  to  a  mine  and  allows,  when  they  ex- 
ist, a  long  life  to  be  modified  by  high  cost,  large  production  to 
be  modified  by  high  cost  and  great  earning  to  be  modified  by 
short  life."  Moreover  we  believe  that  the  tax  on  value  is  the 
only  method  under  which  it  is  possible  to  take  into  account 
these  and  other  necessary  modifications. 

It  is  sometimes  not  realized  how  completely  the  selling 
value,  if  accurately  ascertained,  does  take  into  account  the 
risks  and  contingencies  involved  in  an  operation.  Insofar  as 
mining  does  involve  special  risk  these  are  weighed  by  the  care- 
ful investor  in  fixing  his  purchase  price  and  are  taken  into 
account  by  the  professional  engineer  in  arriving  at  a  valua- 
tion. 

.  We  are  fully  aware  that  the  process  of  evaluating  a  mine 
is  a  dificult  matter  and  one  which  cannot  be  possibly  left  in 
the  hands  of  an  tinskilled  county  assessor.  We  propose  that 
the  entire  assessment  of  ming  property  be  placed  in  the  hands 
of  the  State  Tax  Commission  and  that  in  making  assessments 
they  shall  use  all  available  data  such  as  an  investor  would 
consider  in  determining  how  much  he  would  be  willing  to  pay 
for  the  property.  We  believe  that  it  will  be  necessary  for  them 
to  have  the  assistance  of  skilled  geologists  and  mining  engi- 
neers. Such  service  is  expensive  but  the  cost  of  the  best  talent 
in  connection  with  this  work  will  be  money  Avell  spent  and  will 


70  REPORT  OF  THE  NEW  MEXICO 

be  found  to  compare  very  favorably  with  the  cost  of  assessing 
othei-  classes  of  pi'operty. 

Practicability  of  The  Ad  Valorem  Assessment  of  Mines  .- 
No  matter  liow  promising  a  proposed  solution  of  a  tax  problem 
may  be  from  a  theoretical  point  of  view  if  that  solution  can 
be  shown  to  be  impracticable  and  unworkable  it  deserves 
only  to  be  throA^^l  into  the  discard.  The  test  of  the  operation  is 
absolutely  conclusive  and  final.  An  opponent  may  admit  every 
claim  advanced  by  the  supporters  of  a  measure  but  if  he  can 
show  that  the  plan  is  impracticable  in  every  day  operation,  the 
victory  is  his. 

Conversely,  the  very  best  evidence  as  to  the  practicability 
of  a  tax  measure  is  the  test  of  experience.  If  a  measure  has 
actually  operated  successfully  under  conditions  essentially  sim- 
ilar to  those  obtaining  in  the  place  of  its  proposed  application, 
the  plan  has  a  perfect  defense  against  charges  of  impracti- 
cability. 

The  ad  valorem  method  of  taxing  mines  has  such  a  de- 
fense. In  the  states  where  it  has  been  intelligently  applied, 
as  for  example  in  Michigan,  Wisconsin  and  Minnesota,  the  dif- 
ficult technical  task  of  valuation  has  been  successfully  attacked 
and  the  knotty  problem  of  mine  taxation  more  nearly  solved 
than  in  any  other  place. 

Every  one  knows  that  mines  vary  widely  in  respect  to 
difficulties  of  valuation.  Some  types  of  mine  challenge  the 
best  engineering  skill.  But  this  is  not  generally  true  of  the 
mines  in  New  Mexico.  Coal  mines  which  form  so  large  a 
part  of  the  industry  in  this  state  are  perhaps  easiest  of  all 
mineral  deposits  to  evaluate  and  according  to  the  testimony 
at  the  hearings  of  this  commission  fully  98  per  cent  of  metal- 
lifei'ous  mining  in  the  state  consist  of  phrophyry  operations 
which  present  no  great  difficulties  of  evaluation.  Moreover,  it 
is  pointed  out  in  the  report  of  the  committee  of  the  National 
Tax  Association  (1)  every  type  of  difficulty  has  been  en- 
countered and  surmounted  in  the  states  which  have  made 
serious  attempts  to  arrive  at  ad  valorem  valuations. 

It  is,  of  course,  not  proposed  that  the  state  shall  go  to  the 
expense  of  making  explorations,  including  diamond  drilling 
of  private  mineral  deposits.  It  will  be  sufficient  to  require 
that  all  data  of  this  type  which  has  been  or  may  be  obtained 
as  a  result  of  private  exploration  be  made  available  to  the 
State  Tax  Commission  are  supplied  with  all  the  data  which 
come  and  expenditures  arc  now  supplied  as  an  incident  to  the 
determination  of  the  "net  product".  If  the  experts  of  the 
State  Tax  Commissioii  are  supplied  with  all  the  data  which 

(1)     See  Appendix  III. 


SPECIAL  REVENUE  COMMISSION  71 

the  OAvners  of  the  properties  themselves  possess  and  make  for 
themselves  such  investigations  as  are  possible  from  an  in- 
spection of  outcrops  and  workings,  sufficient  basis  for  a  tax 
valuation  can  ordinarily  be  obtained. 

The  objection  is  sometimes  raised  to  the  ad  valorem  system 
that  it  results  in  heavier  taxation  for  a  mine  which  explores 
its  reserves  than  for  a  mine  which  does  not  do  so  which  both 
places  an  unjust  burden  on  the  mine  whose  reserves  are  es- 
tablished and  tends  to  discourage  the  exploration  of  reserves. 
While  there  is  undoubtedly  some  truth  in  this  assertion,  it 
is  authoritatively  denied  that  in  actual  operation  there  has 
been  any  noticeable  tendency  to  restrict  exploration  in  those 
states  which  utilize  the  ad  valorem  basis.  (1)  The  tax  is,  after 
all,  usually  a  minor  factor.  In  case  the  legislature  deems  it 
desirable  to  adopt  the  "suspense  fund"  plan  suggested  in  a 
later  section  considerable  freedom  might  be  exercised  by  the 
assessing  body  in  placing  tentative  values  on  properties  where 
they  had  reason  to  believe  explorations  were  being  retarded. 

Suspense  Fund.  No  matter  how  competent  the  profes- 
sional advice  and  no  matter  how  sound  the  judgment  of  the 
assessing  authority,  it  still  remains  true  that  the  valuation  of 
mines  is  a  problem  of  peculiar  difficulty  and  that  some  im- 
portant factor  used  in  arriving  at  a  valuation  may  suddenly 
be  found  to  have  been  greatly  misjudged.  Mine  values  are 
not  subject  to  so  constant  a  check  through  actual  sales  as  are 
property  values  generally.  These  facts  may  be  considered  to 
furnish  sufficient  ground  for  special  treatment  in  the  case  of 
mines  to  this  extent,  that  a  special  type  of  insurance  fund  be 
established  to  guarantee,  in  a  sense,  the  accuracy  of  the  asses- 
sor's valuation. 

We  are  not  fully  convinced  of  the  necessity  for  this  special 
treatment  and  we  do  not  urge  it  as  a  specific  recommendation. 
However,  we  can  see  that  such  a  safeguard  may  tend  to  make 
our  general  assessment  plan  more  acceptable  and,  consequently, 
we  outline  an  arrangement  which  we  believe  to  be  essentially 
sound  even  though  not  without  serious  dangers  in  a  state  where 
the  general  level  oi  efficiency  in  the  administration  of  state 
trust  funds  are  not  above  criticism.  The  plan  is  suggested  by 
the  recommendations  of  the  British  Committee  on  Financial 
Risks  Attaching  to  the  Holding  of  Trading  Stocks  which  were 
designed  to  relieve  the  taxpayer  from  the  risk  of  paying  Ex- 
cess Profits  Duty  on  values  which  might  never  materialize. 

It  might  be  possible  for  the  State  Tax  Commission  in  valu- 
ing a  given  mining  property  to  divide  the  assessment  into  two 

(1)  Cf.  Report  of  Committee  of  the  National  Tax  Association, 
Appendix  III. 


72  REPORT  OF  THE  NEW  MEXICO 

parts,  the  first  part  consisting  of  values  of  which  it  felt  cer- 
tain, the  second  part  consisting  of  very  uncertain  values.  It 
might  be  arranged  that  tlie  taxes  assessed  against  the  very 
risky  values  should  be  paid  into  a  special  state  fund  to  be  held 
in  suspense  for  a  given  period  at  the  end  of  which  time  they 
might  be  distributed  to  the  proper  state  and  local  treasuries 
or  refunded  to  the  taxpayer  depending  upon  whether  the 
values  assessed  had  or  had  not  proven  to  be  substantial  in  the 
light  of  developments.  A  receipt  in  the  form  of  a  special  non- 
interest  bearing  contingent  fund  bond  might  be  issued  for  such 
taxes.  After  some  years  of  operation  an  experience  table  might 
be  constructed  which  M'ould  indicate  which  portion  of  the  sus- 
pense fund  could  be  safely  used  for  current  purposes  and  what 
portion  should  be  left  in  reserve  for  repayments. 

We  realize  that  such  an  arrangement  would  be  a  some- 
what complex  refinement,  but  its  adoption  might  prevent  in- 
justice to  certain  individual  tax  payers  and  would  certainly 
make  it  possible  for  the  State  Tax  Commission  to  proceed  in 
a  more  confident  manner  in  fixing  the  assessed  values  of  the 
mines. 

Taxation  of  Oil  Wells.  "We  believe  that  the  same  general 
principle  used  in  valuing  mines  should  be  applied  to  the  tax- 
ation of  oil  properties.  Whatever  their  true  market  value  is 
on  the  day  of  the  assessment  should  be  their  assessed  value 
for  purposes  of  taxation. 

If  it  seems  to  the  legislature  that  there  may  be  some 
danger  of  values  escaping  taxation  under  this  plan  we  can 
see  no  serious  objection  to  an  output  tax  on  the  oil  produced, 
payable  currently,  with  a  proviso  that  receipts  for  output  tax 
paid  in  any  year  be  accepted  in  payment  of  the  regular  taxes 
on  the  property  and  the  excess  refunded. 

Specific  Recoinmendations.  As  a  result  of  our  considera- 
tion of  the  problem  of  mines  taxation  we  submit  the  following 
definite  recommendations : 

(1)  That  new  legislation  be  passed  specifying  that  all 
mining  property  shall  be  valued  on  precisely  the 
same  general  principles  as  other  real  estate;  and  that 
Chapter  55  of  the  laws  of  1915  be  repealed. 

(2)  That  power  to  assess  all  mines  and  mineral  property 
be  vested  in  the  State  Tax  Commission  as  reorganized 
in  accordance  with  our  recommendations  made  elst- 
where  in  this  report  and, 

(3)  That  the  Tax  Commission  be  supplied  with  the  nec- 
essary professional  assistance. 

The  experience  of  other  states  indicates  that  the  provision 


SPECIAL  REVENUE  COMMISSION  73 

for  professional  assistance  need  not  be  elaborate.  In  our  opin- 
ion, it  will  be  essential,  however,  to  place  the  initial  valuation 
in  the  hands  of  a  geologist  or  mining  engineer  of  outstanding 
reputation — one  who  comes  from  outside  the  state  and  who 
has  no  affiliations  with  any  of  the  mining  interests  within  the 
state.  This  was  the  procedure  followed  in  both  Michigan  and 
Wisconsin.  He  should  be  permitted  to  build  up  his  own  or- 
ganization of  assistants. 

It  would  be  very  desirable  that  one  of  the  assistants 
should  be  retained  after  the  completion  of  the  initial  valuation 
as  a  permanent  employe  of  the  State  Tax  Commission  at  a 
salary  of  about  forty-five  hundred  dollars  ($4500).  This  per- 
son should  have  charge  of  the  annual  evaluation  of  the  mines 
(1)  and  should  have  the  privilege  of  consulting  wdth  the  engi- 
neer, who  made  the  original  valuation,  from  time  to  time,  as 
difficult  problems  arise. 

Both  the  original  engineer  and  the  permanent  employe  of 
the  Commission  should  have  the  privilege,  as  professional  men, 
of  making  public  the  values  they  establish  and  recommend. 

AVe  recommend,  consequently,  that  professional  assistants 
be  arranged  for  as  follows: 

(a)  That  the  sum  of  twenty-five  thousand  dollars  ($25.- 
000)  be  appropriated  to  meet  the  expenses  of  the 
initial  valuation:  (2) 

(b)  That  an  engineer  of  national  reputation  be  engaged 
to  undertake  the  work. 

(c)  That  provision  be  made  for  a  permanent  mine  tax 
assessor  at  a  salary  of  forty-five  hunderd  dollars 
($4,500)  per  ann,um.  this  person  to  be  preferably  a 
member  of  the  staff  making  the  initial  valuation, 
and  selected  by  the  person  in  charge  of  that  task ;  and 

(d)  That  a  sufficient  sum  be  provided  annually  for  pay- 
ment of  consultation  fees. 


(1)  That  Is,  he  should  prepare  the  valuations  and  present  them 
to  the  State  Tax  Commission  for  action.  The  Commission  should  have 
the  power  legally  to  establish  the  assessment. 

(2)  The  appropriation  in  Michigan  was  Thirty  Thousand  Dol- 
lars  ($30,000). 

Note:     See  Appendices  IV,  V,  XIX,  XXXIV,  XXXVI. 


CHAPTER  V. 

STATE  ADMINISTRATION. 

Page 

Governor  75 

Secretary  of  State : 78 

Supeiintendent  of  Insurance  79 

Corporation  Commission  : 80 

State  Auditor 83 

Treasurer ; 83 

Traveling  Auditor 85 

No  control  of  revenues  or  expenditures 87 

Budget  law 88 

Financial  Officers 88 

Game  and  Fish  Warden  ' 89 

Highway  Commission 91 

State  Health  Department  and  Child  Welfare  Board 94 

Mounted  Police  - 97 

Supreme  Court 98 

State  Board  with  independent  incomes  98 


SUECIAL  REVENUE  COMMISSION  75 

CHAPTER  V. 
STATE  ADMINISTRATION. 

I. — Governor. 

The  Governor  receives  a  salary  of  $5,000  per  annum, 
$4600  for  other  salaries  and  $5000  contingent  expenses.  He 
is  furnished  with  a  residence  by  the  State.  The  residence  is 
maintained  by  the  Capitol  Custodian  Committee  at  state  ex- 
pense. For  two  years  during  the  recent  was  the  Governor  was 
furnished  with  certain  additional  funds  by  the  Council  of  De- 
fense out  of  the  war  fund  created  by  Chapter  5  of  the  Ex- 
traordinary Session  of  1917. 

We  believe  that  the  Governor's  salary  and  contingent  ex- 
penses should  be  maintained  on  the  basis  contemplated  in  the 
regular  appropriation  act  of  1919,  which  is  a  fair  compensation 
as  compared  with  most  other  states  and  sufficient  to  conduct 
the  office  creditably. 

Sections  5360  and  5361  of  the  Compiled  Laws  of  1915 
provide  for  a  legal  advisor  to  the  Governor  at  an  annual  sal- 
ary of  $2,000.  There  is  no  necessity  for  such  an  office  and  it 
should,  in  our  opinion,  be  at  once  abolished  .  WE  RECOM- 
MEND THE  REPEx\L  OF  SECTIONS  5360  and  5361  OF  THE 
COMPILED  LAWS  OF  1915.  The  Attorney  General  of  the 
State  can  at  any  time  be  called  on  by  the  Governor  for  legal 
advice. 

We  recommend  the  submission  to  the  voters  of  the  state 
of  a  constitutional  amendment  providing  for  the  SHORT  BAL- 
LOT on  the  lines  recommended  bv  a  special  committee  of  the 
TAXPAYERS'  ASSOCIATION  0*F  NEW  MEXICO  appointed 
in  1919  to  investigate  and  report  upon  that  subject.  The  re- 
port of  the  committee  appears  in  full  in  the  Appendix.  (See 
Appendix  VII.)  The  proposed  constitutional  amendment  which 
we  indorse  is  as  follows : 

"BE  IT  RESOLVED  by  The  Legislature  of  the  State 
of  New  Mexico:  That  the  following  amendment  to  tlie 
Constitution  of  the  State  of  New  Mexico  to  be  knoA\Ti  as 
"The  State  Short  Ballot  Amendment",  is  hereby  proposed 
to  be  submitted  to  the  electors  of  the  State  for  their  ap- 
proval or  rejection  at  an  election  to  be  held  in  the  State 
on  the  Tuesday  next  aftei'  the  first  Monday  of  Novem- 
ber, 1921. 

That  hereafter  no  state  executive  officer  or  commis- 
sioner shall  be  elected  at  the  regular  election  held  in  the 
month  of  November,  1922,  or  at  any  election  thereafter, 
.    except  a   Governor  and  a  Lieutenant-Governor,   each  of 


76  REPORT  OF  THE  NEW  MEXICO 

whom  shall  hold  his  office  for  a  terra  of  four  years  be- 
ginning with  the  first  day  of  January  next  after  his  elec- 
tion. The  Governor  shall  nominate  and  by  and  with  the 
advice  and  consent  of  the  Senate  appoint  all  other  state 
executive  and  administrative  officers  created  by  the  Con- 
stitution or  laws  of  the  State  of  New  Mexico,  including 
those  hereafter  to  be  created,  and  all  such  officers  shall 
hold  their  respective  offices  during  the  pleasure  of  the 
Governor. 

State  executive  officers  and  commissioners  heretofore 
elected  by  the  people  shall  contimie  in  office  during  the 
period  for  which  they  were  respectively  elected  unless 
sooner  removed  in  accordance  with  existing  law." 

"We  are  of  the  opinion  that  the  people  of  the  state  should 
have  the  opportunity  to  express  themselves  on  this  very  es- 
sential matter.  We  feel  that  much  of  the  failure  of  our  central 
government  to  function  economically  and  efficiently  is  due 
to  the  lack  of  centralized  responsibility.  No  executive  officer 
can  actually  act  as  an  executive  officer  without  the  power 
to  properly  administer  his  office.  There  should  be  nothing 
very  difficult  about  managing  the  affairs  of  this  state.  There 
should  be  nothing  about  it  essentially  different  from  the  man- 
agement of  the  affairs  of  any  other  correspondingly  large  unit 
of  endeavor  provided  the  man  in  charge  as  executive  chief 
were  in  one  case  given  the  same  powers  and  the  same  respon- 
sibility as  in  the  other.  Theoretically  government  is  a  conveni- 
ence, a  voluntary  substitute  through  united  action  for  accom- 
plishing by  means  of  centralized  organization,  things  that  the 
people  might  do  for  themselves  but  believe  can  be  better  done 
otherwise.  All  these  things  taken  together  in  this  state  amount 
to  a  business  which  is  small  in  comparison  with  many  big 
businesses  carried  on  by  individuals  and  corporations.  But  it 
is  a  vitally  important  business  to  the  people  of  the  state  and 
should  be  carried  on  at  least  as  efficiently  as  the  most  efficient 
private  business.  It  is  a  continuing,  a  never-ending  business 
and  there  is  every  reason  why  it  should  be  carried  on  more  ef- 
ficiently than  other  sorts  of  business.  But,  in  fact,  it  is  not 
conducted  anywhere  near  as  efficiently  on  the  whole  as  most 
M-ell-conducted  private  businesses.  This  is  largely  due  to  the 
fact  that  the  various  departments  of  our  government  business 
are  not  properly  co-ordinated  under  the  leadership  of  one 
responsible  chief.  The  Governor  who  is  theoretically  the  re- 
sponsible administrative  head  of  government  has  in  fact  little 
or  no  power  to  co-ordinate,  amalgamate,  or  harmonize. 

Our  former  territo7'ial  government  was  in  many  respects  a 
much  better  government  for  New  Mexico  than   our  present 


SPECIAL  REVENUE  COMMISSION  77 

state  government.  If  arrangements  could  be  made  for  an  elec- 
tive state  governor  to  have  the  powers  formerly  held  by  an 
appointive  territorial  governor,  and  this  is  about  what  the 
Taxpayers'  Association  Committee  recommends,  we  would,  in 
our  opinion,  in  consideration  of  our  representation  in  the  Fed- 
eral Congress,  have  a  much  better  arrangement  than  either  our 
former  territorial  government  or  our  present  state  government. 

Neither  political  party  adopted  the  plank  in  regard  to  the 
short  ballot  as  recommended  by  the  Committee  although  they 
were  requested  to  do  so.  Objections  are  made  on  the  ground 
that  the  short  ballot  would  put  too  much  power  in  one  man 
and  at  the  same  time  it  is  maintained  that  the  people  are  quite 
capable  of  choosing  a  dozen  men  fit  to  conduct  properly  vari- 
ous central  administrative  offices  which  must  be  co-ordinated 
if  they  are  to  function  equitably.  At  the  same  time  without  a 
real  central  control  such  co-ordination  is  practically  out  of  the 
question. 

We  are  strongly  of  the  opinion  that  the  people  should  be 
given  the  opportunity  to  express  themselves  on  this  matter 
and  that  the  legislature  should  submit  to  them  the  amendment 
proposed  . 

As  an  alternative  proposition  we  suggest  that  the  amend- 
ment as  proposed  be  altered  so  as  to  include  the  State  Auditor 
with  the  Governor  and  Lieutenant-Governor  as  an  elective 
officer.  This  plan  has  been  proposed  in  Ncav  York  and  other 
states  and  is  in  line  with  progressive  thought  on  this  subject. 
We  are,  however,  strongly  of  the  opinion  that  no  other  admin- 
istrative state  offices  besides  these  three  should  be  elective. 

A  two-year  term  for  gubernatorial  and  other  state  offices 
is,  in  our  opinion,  a  mistake.  Section  1  of  Article  V  of  the 
State  Constitution  provides: 

"The  Executive  Department  shall  consist  of  a  gov- 
ernor, Lieutenant-Governor,  Secretary  of  State,  State 
Auditor,  State  Treasurer,  Attorney-General,  Superinten- 
dent of  Public  Instruction  and  Commissioner  of  Public 
Lands,  who  shall  be  elected  for  the  term  of  two  years  be- 
ginning the  first  day  of  January  next  after  their  election. 

"Such  officers  shall,  after  having  served  two  con- 
secutive terms,  be  ineligible  to  hold  any  state  office  for 
two  years  thereafter." 

This  section  was  adopted  at  an  election  held  November 
3.  1914,  in  lieu  of  the  original  section  which  provided  for  four 
year  terms  for  state  officers  and  that  they  should  be  ineligible 
for  re-election  after  serving  one  term. 

We  do  not  know  why  this  change  Avas  made  and  believe 


78  REPORT  OF  THE  NEW  MEXICO 

that  it  generally  is  conceded  to  have  been  a  mistake.  A  change 
back  to  four-year  terms  as  provided  for  in  the  short  ballot 
amendment  is,  in  our  opinion,  desirable  and  we  specifically 
recommend  that  the  terms  of  state  officials  be  by  constitu- 
tional amendment  made  four  years,  instead  of  two,  and  that 
there  be  no  limitation  as  to  the  number  of  consecutive  terms 
which  may  be  held  by  the  same  incumbent.  We  also  recom- 
mend that  the  elections  for  state  officers  be  held  in  non-presi- 
dential years. 

Secretary  of  State. 

One  of  the  principal  functions  of  the  office  of  the  Sec- 
retary of  State  at  present  is  the  issuance  of  automobile  licenses. 
This  is  controlled  by  Chapter  150  of  the  Laws  of  1919  amenda- 
tory of  Chapter  X  of  the  Compiled  Laws  of  1915,  (Sections 
379-394).  Section  393  of  the  original  laAv  provided  that  all  fees 
paid  the  Secretary  of  State  for  such  licenses  "less  the  cost  of 
the  administration  of  this  chapter"  shall  be  paid  to  the  State 
Treasurer  for  the  benefit  of  the  State  Highway  Fund.  Sec- 
tion 15  of  Chapter  38  of  the  Laws  of  1917,  relating  to  High- 
ways stipulates  that  one-half  of  the  net  revenues  paid,  for 
motor  licenses  shall  be  paid  the  state  road  fund  and  one-half 
to  the  counties.  But  the  latest  law,  that  of  1919  provides  that 
the  net  proceeds  of  all  funds  derived  from  the  registration  of 
motor  licenses  shall  be  credited  to  the  State  Road  Fund.  None 
of  these  statutes  designate  what  the  net  proceeds  shall  be, 
that  is  to  say  they  do  not  designate  any  limit  for  "administer- 
ing the  chapter".  The  administration  of  the  auto  license  busi- 
ness by  the  Secretary  of  Statee's  office  has,  in  our  opinion, 
been  unreasonably  high. 

For  the  sixth  fiscal  year  the  total  amount  received  from 
automobile  licenses  was  $105,631.35  of  which  $11,969.27  was 
expended  for  administration  as  follows:  Clerk  hire  $5301.05; 
stamped  envelopes  and  postage  $2084.74;  telephone  and  tele- 
graph $171.77  ;  office  supplies  $596.21 ;  printing  $863.85  ;  license 
tags  $2826.45;  drayage  and  freight  $77.51;  express  $19.99; 
t>T)ewriter  $51.00;   miscellaneous   $31.95. 

For  the  seventh  fiscal  year  ending  November  30,  1919, 
a  total  of  $107,833.64  of  Avhich  $15,738.74  was  expended  for 
administration  as  folloAvs:  Salaries  $5805.35;  extra  clerical 
lu'l])  $1381.50;  telegraph  and  telephone  $4.52;  office  supplies 
$574.09;  printing  and  stationery  $2151.05;  freight  and  express 
$676.30;  postage  $2269.84;  license  tags  $2869.09;  miscellaneous 
$7.00. 

For  the  present  fiscal  year.  January  1st  to  October  31st, 
1920,  a  total  of  $200,102.12  has  been  collected  from  automobile 


SPECIAL  REVENUE  COMMISSION  79 

licenses,  the  total  disbursement  for  the  same  period  being 
$17,389.73. 

We  are  of  the  opinion  and  so  recommend  that  the  adminis- 
tration of  the  auto  licenses  be  placed  in  the  hands  of  the 
State  Highway  Commission  and  that  Chapter  150  of  the  Laws 
of  1919,  be  so  amended  as  to  bring  that  about.  We  believe 
that  a  very  considerable  saving  should  and  would  be  effected 
by  such  a  change.  It  is  entirely  proper  in  our  opinion  that 
the  proceeds  from  automobile  licenses  should  be  turned  into 
the  State  Road  Fund  and  be  used  by  that  fund  in  the  manner 
now  designated  in  the  laws  governing  the  State  Highway  Com- 
mission. We  will  elsewhere  in  this  report  make  some  comment 
on  certain  phases  of  the  State's  road  policy.  We  are,  however, 
of  the  opinion  that  a  central  state  road  commission  is  and  ought 
to  be  a  permanent  institution  in  New  Mexico.  It  is  quite  the 
proper  and  fitting  administrative  branch  of  the  central  govern- 
ment for  doing  this  work,  inasmuch  as  the  proceeds  from  the 
licenses  go  into  the  State  Road  Fund.  An  examination  of  the 
procedure  in  most  other  states  demonstrates  that  a  similar 
practice  has  been  inaugurated  in  most  other  state  governments. 

We  recommend  that  the  laws  be  so  amended  as  to  pro- 
vide for  the  administration  of  the  automobile  licenses  by  the 
State  Highway  Commission,  that  the  actual  expenses  of  the  ad- 
ministration be  paid  out  of  the  State  Road  Fund.  In  this 
manner,  we  believe,  the  cost  of  administering  the  license  busi- 
ness will  be  reduced  to  a  minimum.  Every  effort  should  be 
made  to  reduce  to  as  low  a  figure  as  possible  the  cost  of  col- 
lecting funds  such  as  this  license  fund  and  the  gasoline  tax 
fund  which  contribute  materially  to  the  state  road  fund.  The 
greater  such  savings,  the  less  will  be  required  in  the  way  of 
direct  mill  levies  to  support  the  State  Road  Fund.  A  greater 
degree  of  accountability  will  lie  against  one  department  hav- 
ing charge  of  the  collection  as  well  as  the  disbursement  of  those 
funds  than  if,  as  is  now  the  case,  their  collection  is  spread 
through  various  departments. 

Superintendent  of  Insurance. 

For  the  sixth  and  seventh  fiscal  years,  this  office  was 
annually  allowed  $2400  for  the  salary  of  the  superintendent, 
$1200  for  clerk's  salary  and  $1200  for  office  and  traveling  ex- 
penses. For  the  eighth  and  ninth,  the  annual  appropriations 
allowed  $2400  for  the  superintendent's  salary  and  $1600  for 
clerical,  ofice  and  traveling  expenses. 

It  is  generally  conceded  that  the  office  of  superintendent 
of  insurance  shoiild  be  abolished.  The  various  functions  of 
the  office  should  be  distributed  among  other  departments.  The 
regulatory   and   examination    functions   should    be   performed 


80  REPORT  OF  THE  NEW  MEXICO 

under  the  supervision  of  the  State  Bank  Examiner  and  the 
assessniont  of  the  2  per  cent  tax  on  premiums  written  should 
he  turned  over  to  the  State  Tax  Commission,  the  collection  of 
the  tax  being  made  by  the  State  Treasurer. 

The  examination  of  insurance  companies  and  the  granting 
of  certificates  Anil  not  be  incompatible  with  the  general  and 
primary  duties  of  the  State  Bank  Examiner.  The  cost  of  ex- 
amination is  borne  by  the  company  examined.  In  fact,  it  is 
quite  possible  in  the  judgment  of  this  commission  for  the 
State  Bank  Examiner's  office  to  perform  all  the  duties  of  the 
State  Superintendent  of  Insurance  and  thus  save  the  state  at 
least  $2000.  An  additional  assistant  Avould  of  course  have  to 
be  employed  by  the  State  Bank  Examiner. 

The  commission  cannot  too  strongly  condemn  the  practice 
that  has  existed  of  permitting  a  state  officei-  to  be  absent  from 
his  office  and  perform  no  duties  nor  render  the  state  any 
service  and  at  the  same  time  draw  full  pay.  This  has  been 
the  situation  in  the  insurance  department.  Had  it  not  been 
for  the  willingness  of  a  capable  deputy  to  hold  the  position 
at  a  low  salary,  the  state  would  undoubtedly  have  suffered 
from  the  negligence  of  the  head  of  the  department. 

Corporation  Conmussion. 

We  recommend  the  immediate  repeal  of  Section  1  to  Sec- 
tion 12  of  Article  XI  of  the  Constitution  of  the  State  of  New 
Mexico  creating  the  State  Corporation  Commission.  We  be- 
lieve that  experience  has  already  proven  that  the  Commission 
is  not  an  effective  instrumentality  for  public  good  and  that 
the  expense  involved  in  its  administration  is  utterly  unjusti- 
fied considering  the  results  attained.  For  the  sixth  and  sev- 
enth fiscal  years  the  appropriation  for  the  maintenance  of  this 
commission  Avere  $22,000  a  year,  for  the  eighth  and  ninth 
$22,300  a  year.     The  latter  appropriations  were  as  follows: 

(1)  For  salaries  members  of  Commission $9,000.00 

(2)  For  salary  Chief  Clerk 2,000.00 

(3)  For  salary  Assistant  Clerk  1,500.00 

(4)  For  salary  Rate  Clerk 2,700.00 

(5)  For  salary  Record  Clerk 1,200.00 

(6)  For  salary  two  stenographers 2,400.00 

(7)  For  contingent  of  ice  and  traveling  expenses  3,500.00 

It  is  quite  out  of  the  question  to  bring  about  any  saving 
in  the  total  cost  of  government  unless  the  people  are  willing 
to  cut  out  such  expenditures  as  are  manifestly  unjustified. 
The  cost  of  this  commission  is,  we  are  fully  convinced,  such  a 
one.    An  examination  of  the  situation  made  with  the  assistance 


SPECIAL  REVENUE  COMMISSION  81 

of  a  totally  unprejudiced  and  highly  qualified  outside  expert 
shows  that  in  view  of  the  constantly  expanding  powers  and 
duties  of  the  Interstate  Commerce  Commission  this  sate  com- 
mission is  quite  superfluous. 

Section  6  of  Article  XI  of  the  Constitution  provides  that 
the  Corporation  Commission  shall  issue  corporation  charters  to 
domestic  corporations  and  licenses  to  foreign  corporations  and 
collect  all  fees  for  the  same.  These  fees  amounted  in  1920  to 
$33,000  and  more  than  offset  the  expenses  of  the  commission. 
That  fact  has  been  cited  as  justifying  the  cost  of  the  commis- 
sion. The  State  Supreme  Court  has  also  decided  that  a  trans- 
fer of  all  the  poAvers  of  supervision  and  control  of  insurance 
companies  from  the  Superintendent  of  Insurance  to  the  Cor- 
poration Commission  was  contemplated  by  this  section.  The 
superintendent  was  therefore  required  to  transfer  all  charters, 
papers  and  documents  relating  to  corporations  on  file  in  his 
office.  But  except  as  to  the  powers  specifically  conferred  upon 
the  corporation  commission,  so  the  court  held,  the  section  is 
not  self  executing  and  did  not  abolish  the  office  of  Superinten- 
dent of  Insurance.  In  spite  of  the  fact  that  there  was  nothing 
left  for  such  an  officer  to  do  the  legislatures  have  continued 
'  to  appropriate  $2400  a  year  for  salary  and  $2000  or  more  for 
expenses  of  the  office,  and  the  governor  to  appoint  a  nincum- 
bent  to  the  office.  This  is  manifestly  a  waste  of  money  which 
is  quite  inexcusable. 

We  recomend  therefore : 

I.  The  passage  by  the  legislature  of  a  joint  resolution 
providing  for  the  submission  to  the  people  of  a  constitutional 
amendment  repealing  Sections  1  to  12  of  Article  XI  of  the 
Constitution  and  substituting  present  sections  numbered  13  to 
18,  inclusive,  as  Sections  1  to  6,  inclusive,  of  Article  XI  as 
amended. 

II.  The  passage  by  the  legislature  of  laws  placing  in  the 
office  of  the  Secretary  of  State  the  powers  and  duties  as  to 
the  regulation  of  domestic  and  foreign  corporations,  grant- 
ing of  franchises,  etc.,  now  granted  to  the  corporation  commis- 
sion by  Section  6  of  Article  XI  of  the  present  constitution  and 
appertaining  to  the  Corporation  Commission  because  of  the 
decision  in  the  case  of  State  vs.  Sargent  (139  Pac.  144)  relating 
to  the  functions  of  the  Superintendent  of  Insurance. 

III.  The  passage  of  laws  creating  one  Public  Utilities 
Commissioner  with  such  powers  relating  directly  to  the  con- 
trol of  Public  Utilities  within  the  state  as  may  be  deemed 
necessarv  after  a  careful  analysis  of  the  question. 

TV.  ■  The  repeal  of  Sections  2801  to  2811  of  the  compiled 


g2  REPORT  OF  THE  NEW  MEXICO 

laws  of  1915  and  the  re-enactment  of  such  portions  thereof  as 
may  bo  deemed  advisable  in  order  to  bring  the  functions  of  the 
Superintendent  of  Insurance  into  the  hands  of  the  Bank  Ex- 
aminer and  the  State  Tax  Commission.  The  amendment  of 
Chapter  84  of  the  Laws  of  1917,  Chapter  XXIII  of  the  Com- 
piled Laws  of  1915,  Chapter  112  of  the  Laws  of  1917,  Chapter 
56  of  the  Laws  of  1917,  Chapter  120  of  the  Laws  of  1919  and 
all  other  laws  insofar  as  it  is  necessary  so  to  do  in  order  to 
bring  under  the  jurisdiction  of  the  Secretai*y  of  State  all  func- 
tions in  connection  with  corporations  and  insurance  companies 
now  appertaining  under  the  constitution  and  present  laws  to 
the  Corporation  Commission. 

By  carrying  out  this  program  in  connection  with  the  trans- 
fer of' the  auto  license  business  from  the  Secretary  of  State's 
office  to  that  of  the  State  Highway  Commission  the  adminis- 
tration will,  we  believe,  be  effectively  concentrated,  the  peo- 
ple's l)usiness  done  as  well  or  better  than  at  present,  the  rights 
of  all  parties  properly  protected  and  a  great  saving  in  cost 
effected.  A  conservative  estimate  of  the  saving  to  be  effected 
by  the  foregoing  suggested  readjustments  is  we  believe  as 
follows : 

Cost  Eliminated  per  Annum: 

I.  Net  saving  in  the  cost  of  collecting  auto- 
mobile licenses  by  changing  from  the  Sec- 
retary of  State  to  the  office  of  the  State 

HighAvay  Commission,  estimate  at _ $  7,500.00 

IT.     Costs  of  the  Corporation  Commission 22,300.00 

ITT.     Cost  of  Office  Superintendent  of  Insurance     4,000.00 

$33,300.00 
Costs  Under  Readjustment: 

I.     Corporation    Record    Clerk    Secretary    of 

State -- $  2,000.00 

TT.     Insurance  Clerk,  State  Bank  Examiner 2,000.00 

ITT.     >]xtra  stenographic  help,  Secretary  of  State     1,200.00 
TV.     Costs  of  office  of  Public  Utilities  Commis- 
sioner   _ 7,500.00 


$12,700.00 
Net  saving' $20,600.00 

If  upon  legal  advice  it  appears  to  be  proper,  we  advise  the 
passage  by  the  legislature  of  the  laAvs  advocated  in  this  con- 
nection, at  the  coming  session  of  the  legislature  to  become  ef- 
fcftive  upon  the  adoption  by  the  people  of  the  amendment 
proposed.    This  would  hasten  the  consumation  of  the  program. 


SPECIAL  REVENUE  COMMISSION  83 

a  program  which,  we  feel  sure,  will  appeal  to  the  people  and 
voters  of  the  state  when  properly  brought  before  them. 

State  Auditor,  Treasurer  and  Traveling-  Auditor. 

General.  The  offices  of  the  State  Treasurer,  State  Audito, 
Ti-aveling  Auditor  are  important  units  in  the  financial  organi- 
zation of  the  state.  The  first  two  positions  are  elective  and 
the  position  of  traveling  auditor  is  appointive  by  the  State 
Auditor.  The  terms  of  the  incumbents  of  all  of  these  offices 
are  two  years. 

The  State  Treasurer  is  required  to  receive  and  keep  all 
moneys  of  the  state  except  when  otherwise  specifically  pro- 
vided, and  the  Auditor  is  required  to  audit,  adjust,  and  settle 
all  claims  against  the  State  payable  out  of  the  treasury.  It  is 
the  duty  of  the  traveling  auditor  to  examine  and  audit  the 
accounts  of  all  state  and  county  officials  and  state  institutions, 
together  with  building  and  loan  associations  and  such  corpora- 
tions as  seem  to  be  quasi-banking  in  character.  He  also  has 
power  to  install  uniform  systems  of  accounting  in  the  various 
offices  and  institutions. 
State  Treasurer. 

As  stated  above,  the  function  of  the  State  Treasurer  is  to 
receive  and  keep  all  moneys  and  to  pay  them  out  upon  war- 
rants of  the  Auditor.    He  also  is  required  to  invest  the  moneys 
in  safe  interest  bearing  securities  or  deposit  in  a  bank. 
State  Auditor. 

The  title  of  State  Auditor  is  a  misnomer;  the  position  is 
rather  that  of  comptroller  and  the  title  should  be  changed 
to  State  Comptroller,  but  under  the  present  financial  plan  his 
duties  of  control  are  simple.  In  making  appropriations,  the 
General  Asseral)ly  designates  the  funds  in  favor  of  which  the 
various  appropriations  are  made.  Most  of  these  are  in  lump 
sums,  although  in  some  departments,  as  for  instance,  the  State 
Penitentiary,  the  total  appropriation  is  divided  into  four  parts, 
namely:  current  expense,  maintenance,  board  and  transporta- 
tion of  discharged  convicts. 

The  Auditor  keeps  the  following  records: 

1.  A  voucher  record  in  Avhich  he  enters  in  numerical  or- 
der under  each  one  of  the  funds  provided  for,  the  vouchers 
drawn  against  such  funds  by  the  respective  departments  or  in- 
stitutions. 

2.  A  general  ledger  in  which  a  separate  account  is  set 
up  for  each  fund.  The  auditor  enters  in  connection  with  each 
account  the  total  amount  of  the  appropriation.  As  moneys  are 
received  from  various  sources,  such  as  lax  payments,  etc., 
entry  is  made  on  the  credit  side  of  the  ledger,  and  as  disburse- 


84  REPORT  OF  THE  NEW  MEXICO 

ments  are  made,  entries  are  made  on  the  debit  side  of  the 
ledger. 

3.  A  subsidiary  ledger.  In  this  ledger  the  Auditor  keeps 
certain  subsidiary  accounts  of  what  should  be  controlling  ac- 
counts in  a  general  ledger.  Some  of  these  accounts  are  real 
subsidiary  accounts  of  real  controlling  accounts,  and  some  are 
largely  duplications.  An  example  of  the  latter  is  that  for  salary. 
This  account  is  divided  into  two  parts;  one,  salaries  and  wages 
of  officials  and  clerical  help,  and  the  other,  contingencies. 
The  appropriation  for  the  total  amount  for  salaries  is  entered 
in  the  General  Ledger,  and  all  receipts  and  disbursements  are 
entered  thereunder.  The  Auditor,  however,  keeps  in  the  sub- 
sidiary ledger  the  account  with  contingencies,  in  which  he 
enters  as  credits  that  proportion  of  each  receipt  of  money  as 
the  total  appropriation  for  contingencies  bears  to  the  total  ap- 
propriation for  salaries.  He  also  enters  on  the  debit  side  of 
the  subsidiary  account  all  payments  for  contingencies.  Thus, 
it  will  be  seen  that  the  debits  for  contingencies  in  the  subsidi- 
ary account  are  duplicates  of  those  made  in  the  General 
Ledger. 

Copies  of  receipts  of  money  paid  in  received  from  the  State 
Treasurer  constitute  the  Auditor's  authority  for  making  en- 
tries in  his  books.  The  receipts  are  as  follows:  1.  Tax  re- 
ceipts; 2.  Miscellaneous  receipts;  3.  Land  office  receipts;  4. 
Game  protection  receipts.  These  receipts  are  issued  by  the 
Treasurer  in  triplicate,  the  original  going  to  the  person  pay- 
ing in  the  money,  the  duplicate  to  the  State  Auditor,  and  the 
triplicate  remaining  in  the  Treasurer's  office.  Each  of  these 
said  forms  bears  a  serial  number,  and  the  only  check  the  Audi- 
tor has  that  the  Treasurer  is  sending  him  all  of  the  moneys 
he  collects  is  to  see  that  the  receipts  are  in  serial  number  or- 
der. He  has  no  way  of  knowing  whether  the  Treasurer  is  re- 
ceiving any  money  for  which  he  gives  no  receipts,  nor  that 
the  Treasurer  perhaps  is  not  issuing  a  duplicate  series  of  re- 
ceipts. The  Treasurer  makes  no  report  whatever  to  the  Audi- 
tor; therefore,  the  Auditor  does  not  know  whether  his  books 
balance  wdth  the  Treasurer's  until  an  audit  is  made  by  the 
Traveling  Auditor.  Such  an  audit  is  now  being  made  but  it 
is  the  first  for  a  considerable  period.  Theoretically  the  Audi- 
tor should  be  in  balance  wnth  the  Treasurer,  except  for  out 
standing  warrants. 

Moneys  paid  into  the  state  treasury  can  only  be  removed 
therefrom  by  warrants  drawn  upon  the  State  Treasurer  by  the 
Auditor.  In  order  to  secure  such  a  warrant,  the  department 
issues  its  o^^^l  voucher,  signed  by  the  department  head.  When 
such  a  voucher  is  presented  to  the  Auditor,  he  checks  it  with 
the  account  upon  w'hich  it  is  drawn,  and  if  there  are  sufficient 


SPECIAL  REVENUE  COMMISSION  85 

funds,  issues  a  warrant  therefor.  If  there  are  not  sufficient 
funds,  he  holds  up  the  voucher.  It  is  sometimes  the  practice 
for  departments  to  issue  vouchers  and  to  give  them  direct 
to  the  payee  who,  instead  of  going  to  the  Auditor  and  getting 
a  Avarrant  on  the  Treasurer,  deposits  the  voucher  in  a  bank, 
and  the  bank  takes  such  vouchers  to  the  Auditor  and  gets 
warrants  upon  the  Treasurer.  This  practice  is  not  peculiar 
to  the  State  of  New  Mexico,  but  is  nevertheless  not  good 
practice. 

Traveling  Auditor. 

The  functions  of  the  Traveling  Auditor,  as  above  indicated,, 
are  to  audit  the  accounts  of  the  State  departments  and  insti- 
tutions, the  accounts  of  county  officers,  and  the  accounts  of 
building  and  loan  associations,  and  quasi-banking  corporations. 
There  are  a  total  of  189  such  offices  and  instutions.  These 
are  as  follows: 

State  offices  and  departments  18 

State  institutions  14 

Building  and  loan  associations , 12 

County  officers,  including  county  clerk,  county 
treasurer,  sheriff,  county  school  superin- 
tendent, road  superintendent  in  29  counties 145 


Total 189 

Also  as  stated  above,  the  Traveling  Auditor  and  his  as- 
sistants are  appointed  by  the  State  Auditor.  At  present  there 
are  four  assistants,  two  of  whom  receive  $2100  a  year  each  and 
two  $1800  a  year  each.  The  Traveling  Auditor  also  has  an  office 
clerk  who  receives  $1500.00  a  year.  The  Traveling  Auditor 
claims  he  has  good  assistants,  and  that  he  requires  that  an  ap- 
plicant shall  be  an  experienced  accountant.  He  state,  however, 
it  is  necessary  for  him  to  break  in  newly  appointed  assistants. 

The  Traveling  Auditor  is  given  authority  to  establish 
standard  systems  of  accounts.  He  states  that  such  a  system 
has  been  designed  for  counties  and  has  been  installed  and  is 
in  satisfactory  use.  He  says  that  the  system  for  depaiinuints 
and  institutions  necessarily  varies,  and  that  it  cannot  be  said 
that  any  standard  system  is  in  general  use  among  the  depart- 
ments and  institutions. 

The  law  requires  that  all  state  and  county  officials  shall 
account  for  materials  and  equipment  coming  into  their  posses- 
sion, as  well  as  moneys.  This  law  has  not  been  enforced  with 
any  great  degree  of  success. 

The  Traveling  Auditor  requires  the  county  clerk,  county 


86  REPORT  OF  THE  NEW  MEXICO 

treasurer,  and  sheriff  in  each  county  to  make  a  monthly  re- 
port.   These  reports  are  checked  over  by  the  clerk. 

Soetion  6,  Chapter  128,  Laws  of  1919,  provides  that  "The 
Traveling  Auditor  *  *  *  shall  have  power  to  examine  the  finan- 
cial affairs  of  *  *  *  offices  *  *  *,  and  shall  make  such  ex- 
amination once  each  year,  or  oftener  if  the  State  Auditor 
deems  it  necessary."  The  manifest  intent  of  this  section  is  to 
require  annual  audits,  but  the  last  clause  seems  to  furnish  an 
opportunity  for  a  less  rigid  interpretation. 

In  any  case  th  Auditor  is  now  considerably  behind  in 
making  audits.  He  says  that  some  counties  and  some  depart- 
ments and  institutions  have  not  been  audited  for  four  years. 
He  admits  that  this  situation  is  bad,  but  points  out  that  it  is 
better  than  Avhen  he  took  office,  when  some  departments,  in- 
stitutions, and  counties  had  not  been  audited  for  nine  years. 
The  Auditor  feels  that  in  order  to  actually  keep  up,  he  wotild 
have  to  have  eight  assistants.  In  support  of  this  contention,  he 
points  out  that  he  has  a  large  number  of  completed  audits 
lying  on  his  desk  but  that  because  of  press  of  work,  and  the 
fact  that  he  himself  must  assist  in  the  making  of  audits,  he 
cannot  go  into  these  finished  reports  and  submit  them  as  soon 
as  he  should.  The  Auditor  states  that  his  audits  are  not 
"mere  checks"  as  some  have  contended,  but  that  he  makes  real 
audits.  In  his  annual  report  for  the  Fifth  and  Sixth  Fiscal 
years,  the  Auditor  gives,  on  page  48,  the  various  steps  which 
he  takes  in  making  each  audit.  He  insists  that  in  the  taking 
of  such  steps  a  complete  audit  is  assured. 

In  the  annual  report  above  referred  to,  the  Auditor  makes 
certain  recommendations  all  of  which  are  concurred  in  by  this 
commission. 

1.  That  the  audit  of  building  and  loan  associations  and 
quasi-banking  oi-ganizations  should  not  be  made  by  the  Travel 
ing  Auditor,  but  by  the  Bank  Examiner,  and  that  the  functions 
of  the  Traveling  Auditor  should  be  limited  to  the  audit  of  the 
accounts  of  public  officials  and  institutions. 

2.  That  accounting  juristdiction  over  all  towns  and  vil- 
lages, whether  incorporated  or  not,  independent  school  dis- 
tricts, justices  of  the  peace  and  other  officials  and  corporations 
of  a  purely  public  nature,  should  be  added  to  the  duties  of  the 
Traveling  Auditor. 

3.  That  if  the  scope  of  the  work  of  the  office  be  extended, 
as  recommended  in  item  two,  the  law  should  be  further  amend- 
ed so  as  to  provide  that  bonding  companies  and  personal  bonds- 
men should  not  be  relieved  from  responsibility  and  liability  on 
bonds  of  public  officials  until  given  by  the  Auditor  an  official 
clearance  or  notice  that  no  liability  exists. 

4.  That   the   Public  Moneys  Act,   Chapter  57,   Laws   of 


SPECIAL  REVENUE  COMMISSION  87 

1915,  should  be  so  amended  as  to  show  the  proper  disposition 
of  interest  received  on  public  deposits. 

No  Central  Control  of  Revenues  or  Expenditures. 

All  of  the  above  discussion,  especially  in  connection  with 
the  State  Treasurer  and  State  Auditor,  applies  almost  entirely 
to  funds  raised  by  taxation.  Funds  earned  from  the  lease  or 
sale  of  public  lands  and  part  of  the  moneys  received  from  the 
collection  of  automobile  licenses  are  also  turned  over  to  the 
State  Treasurer,  this  being  in  addition  to  taxes.  However, 
these  funds  do  not  by  any  means  constitute  all  of  the  revenues 
of  the  state  departments  and  institutions.  The  educational  in- 
stitutions have  the  revenue  they  derive  from  fees,  tuition,  sale 
of  books,  etc.  The  penitentiary  earns  money  in  addition  to  that 
earned  by  prisoners.  The  charitable  institutions  collect  pay- 
ments from  relatives  of  inmates  for  maintenance,  etc.  All  of 
these  earnings  are  kept  by  the  instutions  or  departments,  and 
expended  by  them  as  they  see  fit.  They  are  neither  turned 
over  to  the  State  Treasurer  nor  is  their  expenditure  in  any 
way  controlled  by  the  State  Auditor.  The  Traveling  Auditor, 
it  is  true,  checks  these  receipts  and  disbursements,  the  same 
as  he  does  appropriations,  but  this  check  by  no  means  gives 
the  proper  control.  It  simply  means  that  if  an  improper  use 
of  the  funds  has  been  made,  it  probably  will  eventually  be 
discovered.  It  is  obvious  that  any  money  earned  by  any  de- 
partment or  institution  is  just  as  much  state  money  as  that 
received  from  taxation  or  sale  of  lands.  Any  moneys  so  earned 
should  operate  to  reduce  the  necessary  tax  levy.  If  it  could 
be  possible  for  all  institutions  and  departments  to  be  self-sup- 
porting, there  would  be  no  need  for  any  tax  levy  at  all.  Mani- 
festly departments  and  instutions  should  be  encouraged  to  earn 
all  they  can  legitimately,  keeping  in  mind  at  all  times  the  fact 
that  the  state  government  exists  for  the  purpose  of  performing 
service.  It  follows  that  all  moneys  earned  by  departments 
and  institutions  should  be  paid  ino  the  state  treasury,  and  that 
appropriations  for  the  total  amount  needed  by  state  depart- 
ments or  institutions  should  be  made  by  the  General  Assembly 
in  the  appropriation  act.  In  order  to  provide  for  contingen- 
cies, a  contingent  fund  should  be  set  up,  withdrawals  from 
which  could  be  made  at  the  direction  of  the  committee  com- 
posed perhaps  of  the  Governor,  and  two  other  officals.  If  a 
department  or  institution  found  that  its  appi-opriation  for  a 
given  item  was  insufficient,  by  reason  of  accidents  or  business 
beyond  that  estimated,  a  withdrawal  should  be  made  from  the 
contingent  fund  for  the  benefit  of  s.iK'h  department  or  insti- 
tution. 


88  REPORT  OF  THE  NEW  MEXICO 

Budget  Law. 

If  such  a  plan  as  generally  outlined  abov^e  be  favored,  a 
conipi-ohensive  budget  law  should  be  enacted.  Just  whether 
such  budget  should  be  an  executive  budget  or  a  legislative 
budget,  or  a  combination  of  the  two,  it  is  too  early  to  state. 
Departments  should  be  required  to  make  their  estimates  in 
accordance  with  the  proper  classification  of  items  of  expen- 
diture, and  the  appropriating  body  should  appropriate  for  the 
various  functions  of  departments  or  institutions  in  accordance 
with  such  general  classification.  In  other  words,  appropria- 
tion should  be  made  for  salaries  and  Avages,  for  fees,  for  office 
supplies  and  stationery,  for  equipment,  for  capital  outlay,  etc., 
but  provision  should  be  made  that  transfers  from  one  fund 
to  another  may  be  permitted  upon  a  showing  that  an  emergen- 
cy exists,  and  after  a  proper  approval  by  a  board  such  as  that 
mentioned  above. 

This  sort  of  a  budget  law  should  also  require  that  the 
Auditor  or  rather  Comptroller  keep  appropriation  accounts 
for  each  of  the  items  in  the  appropriation  act.  This,  it  is  true, 
will  require  a  more  elaborate  set  of  books  and  perhaps  an  ad- 
ditional bookkeeper,  but  it  is  believed  that  the  benefits  of 
central  control  of  revenues  and  expenditures  will  far  outweigh 
any  additional  cost  occasioned  thereby.  The  departments  in 
estimating  for  the  next  fiscal  year  will  l)e  able  to  make  use 
of  the  classification  of  the  amounts  expended  during  the  past 
year  as  recorded  by  the  comptroller,  and  Avithin  one  or  two 
years  should  bo  able  to  make  accurate  estimates  for  the  various 
items. 

Financial  Officers. 

Eventually  the  State  may  wish  to  create  a  department  of 
finance,  in  which  the  Treasurer,  Comptroller,  Auditor,  Tax 
Commission  and  other  persons  or  1)odies  handling  or  being  re- 
sponsible for  state  funds,  would  be  heads  of  branches.  The 
head  of  such  a  department  would  be  appointed  by  the  Governor 
and  he  would  appoint  his  branch  heads. 

It  is  manifestly  improper  for  the  State  Auditor  to  appoint 
a  State  Traveling  Auditor,  as  at  present,  inasmuch  as  the 
Traveling  Auditor  turns  around  and  audits  the  books  of  his 
.superior.  This,  under  present  conditions,  and  with  the  present 
personnel,  may  be  alright,  but  it  is  perfectly  possible  that  it 
could  be  degenerated  into  a  farce.  The  title  of  the  Traveling 
Auditor  should  also  be  changed  to  that  of  State  Auditor,  with 
functions  as  at  present,  plus  those  recommended  above.  (See 
suggestion  for  change  of  title  of  present  Auditor,  page  83.) 
He.  should  probably  be  apointed  by  the  Governor,  with  the 


SPECIAL  REVENUE  COMMISSION  89 

consent  of  the  Senate,  but  for  a  longer  term,  and  a  term  not 
so  co-incident  with  that  of  the  Governor.  If  the  term  of  the 
Governor  is  to  remain  two  years,  the  term  for  the  State  Audi- 
tor should  be  perhaps  five  years ;  if  the  terms  for  Governor  is 
extended  to  four  years,  the  term  of  six  years  for  the  State 
Auditor  would  be  satisfactory.  The  State  Auditor  should  be 
removable  only  for  malfeasance  in  office,  and  then  only  by 
the  Governor  ^dth  the  consent  of  the  Senate.  In  other  words, 
the  Auditor  should  be  the  most  independent  officer  in  the 
state.  Moreover,  he  should  undoubtedly  have  more  assistants, 
at  least  to  enable  him  to  bring  his  Avork  up  to  date,  and  it  would 
be  well  to  require  higher  qualifications.  In  no  other  way  can 
the  state  be  assured  of  satisfactory  and  complete  audits. 

Game  and  Fish  Warden. 

This  department  for  the  sixth  fiscal  year  received  a  total 
of  $22,424.80  from  licenses,  fines,  etc.  It  received  no  direct 
appropriation  from  taxes.  The  receipts  of  the  fiscal  year 
mentioned  added  to  the  balance  at  the  beginning  of  the  year 
of  $9,137.90  made  a  total  of  $31,561.70  available.  The  total 
disbursements  amounted  to  $25,705.16  of  which  $4100  covered 
the  salaries  of  the  game  warden,  his  chief  deputy  and  a  steno- 
grapher. The  field  deputies  were  paid  $5,686.28  and  $15,918.88 
covered  other  expenses. 

At  the  beginning  of  the  seventh  fiscal  year,  December  1, 
1918,  the  balance  on  hand  was  $5,857.54.  The  receipts  for  the 
year  following  were  $31,990.02  and  the  expenditures  $29,156.82, 
leaving  a  balance  on  November  30,  1919,  of  $8,690.74.  The  re- 
port for  the  eighth  fiscal  year  will  not  be  available  for  three  or 
four  weeks,  but  at  this  date,  November  8,  1920,  the  balance  in 
the  fund  is  $19,721.76. 

A  report  submitted  to  the  Commission  for  the  period 
March  12,  1919,  to  June  30,  1920,  showed  expenditures  as 
follows: 

Salary  of  Game  Warden  $  3,148.36 

Salary  of  Chief  Deputy 2,361.59 

Salary  of  License  Colector  and  Clerk 1,596.72 

Salary  and  Expenses  of  Field  Deputies 9,432.21 

Additional  clerical  and  other  service 225.00 

Printing  and  binding 2,964.55 

Telephone  and  telegraph  570.34 

Freight,  express  and  drayage  80.83 

Equipment 339.78 

Supplies  and  stationery _ 90.06 

Postage  306.00 

Traveling  ; _ 1 ,610.94 


90  REPORT  OF  THE  NEW  MEXICO 

Autoiiu)l)ilc 3,674.45 

Preniiiiins  on   Bonds  299.59 

Fish  propagation - 5,298.31 

Game  propagation  325.75 

Total  for  fifteen  months $32,324.48 

At  its  Fourth  Annual  Meeting  at  Santa  Fe,  April  23  and 
24,  1T)20,  the  New  Mexico  Game  Protective  Association  adopted 
a  plan  for  reorganization  of  the  Game  and  Fish  Department 
Avhieh  the  .secretary  of  the  association  discusses  as  follows: 

"The*  present  New  Mexico  state  game  law  provides  for 
the  appointment  of  a  state  game  warden  by  the  Governor. 
The  salary  is  $2400.  The  powers  delegated  by  the  present 
law  are  practically  limited  to  law  enforcement  work.  "While 
able  and  experienced  men  have  occasionally  been  appointed 
under  the  present  system,  the  appointments  have  always  been 
political  in  nature,  the  tenure  of  office  is  two  years  and  ac- 
cordingly the  opportunities  for  actual  constructive  work  very 
small.  During  the  past  three  campaigns  the  G.  P.  A.  has  at- 
tempted to  secure  non-political  appointments,  but  generally 
failed.  Due  to  the  entire  responsibility  for  the  State  Game 
Department  being  vested  in  one  man  and  due  to  the  growth  of 
the  income  from  licenses,  the  last  legislature  has  imposed 
severe  restrictions  upon  the  game  warden  in  the  expenditure 
of  the  income  of  his  department. 

"The  fundamental  idea  of  the  proposed  plan  for  a  State 

Game  Commission  is: 

(1)  To  remove  the  department  from  politics. 

(2)  To  greatly  enlarge  its  powers,  including  the  delega- 
tion of  authority  to  establish  refuges  and  change 
seasons. 

(3)  To  pay  an  adequate  salary. 

(4)  To  divide  the  responsibility  for  the  department  be 
tween  the  warden  who  Avould  be  an  executive  or 
general  manager,  and  a  game  commission  who  would 
act  as  a  board  of  directors  and  establish  the  policies 
of  the  department.  By  vesting  responsibility  in  a 
group  of  men  instead  of  one  man,  it  is  hoped  to  lay 
the  basis  for  the  removal  of  the  financial  restrictions 
now  imposed  on  the  expenditures  of  the  department's 
income. 

"The  non-political  nature  of  the  commission  under  the 
proposed  plan  would  be  ass.ured  by  the  provision  which  re- 
quires the  selection  of  two  out  of  three  of  the  commissioners 
from  the  scientific  staffs  of  the  existing  state  institutions. 


SPECIAL  REVENUE  COMMISSION  91 

"The  plan  proposes  that  the  warden  be  appointed  by  the 
commission  instead  of  by  the  governor  as  at  present. 

"The  commisison  would  be  a  continuing  commission  for 
the  reason  that  the  qualified  men  on  the  staffs  of  the  state 
institutions  are  limited  in  number.  Under  the  proposed  plan 
the  warden  would  serve  at  the  pleasure  of  the  commission 
which  means  that  a  good  man  would  serve  as  long  as  he  r&ade 
good.  This  would  enable  the  game  wardenship  to  become  a 
professional  instead  of  a  political  plum. 

"Through  the  enlarged  powers  granted  to  the  proposed 
commission,  the  game  refuge  question  would  be  automatically 
solved. 

"One  of  the  strong  points  of  the  proposed  plan  is  that 
the  Game  Protective  Association  would  have  nothing  more 
to  say  than  any  other  group  of  individual  citizens  concerning 
the  policy  or  personnel  of  the  department.  This  removes  the 
objection  heretofore  made  by  the  political  interests  to  the  ef- 
fect that  the  association  was  trying  to  "run"  the  State  Game 
Department." 

We  believe  that  the  plan  recommended  by  the  Game  Pro- 
tective  Association   would   result   in   better   game   protection 
throughout  the  state  and  in  a  better  administration. 
Highway  Commission. 

The  road  question  in  New  Mexico  is  now  and  must  neces- 
sarily remain  one  of  the  most  difficult  of  any  from  the  tax- 
payers' point  of  view.  Demand  for  good  roads  is  very  general, 
but  the  cost  of  constructing  and  maintaining  anywhere  near 
a  complete  system  of  roads  in  the  state  is  in  the  aggregate 
so  great  as  to  be  a  very  serious  burden,  unless  it  be  distributed 
over  a  long  terra  of  years.  To  arrive  at  a  reasonable  plan  for 
meeting  this  demand  at  an  annual  expenditure  which  can  be 
justified  under  existing  conditions,  is  a  problem  not  easy  of 
solution. 

Your  commission  is  convinced  that  the  administration  of 
the  State  Highway  Department  under  the  present  regime  has 
been  in  practically  every  respect  highly  efficient.  An  exami- 
nation of  the  office  of  the  Highway  Engineer  shows  that  it  is 
conducted  in  a  thoroughly  busines.s-like  manner,  and  there  is 
little  or  nothing  that  could  be  suggested  in  the  way  of  improve- 
ment in  the  administration  of  that  department,  either  in  its 
office  at  Santa  Fe  or  throughout  its  six  district  organizations. 

Most  of  the  work  of  the  commission  is  now  on  federal  aid 
projects  and  there  has  been  a  great  deal  of  discussion  thi^ough- 
out  the  state  as  to  the  Avisdom  of  building  such  expensive 
roads  as  have  in  the  past  been  required  under  the  federal  aid 
regulations.  These  laws  necessitate  the  meeting  by  state  and 
county  appropriations  of  the  amount  grantofl  to  1he  st;ile  by 


92  REPORT  OF  THE  NEW  MEXICO 

the  federal  government  for  road  building.  The  total  of  the 
federal  aid  available  to  this  state  under  federal  laws  now  in 
operation  is  $4,389,794.61.  Of  this  amount  $341,394.34  had 
been  paid  to  the  state  prior  to  January  1,  1920.  In  order  to 
secure  the  balance  of  these  funds  provisions  must  be  made 
by  the  state  to  match  them  within  a  limited  time.  For  this 
purpose  laws  have  already  been  passed  authorizing  a  three 
mill  county  levy  and  a  one  and  a  half  mill  state  levy  for  the 
years  1919,  1920  and  1921,  and  it  is  the  opinion  of  this  com- 
mission that  it  will  take  something  over  a  million  dollars  more 
money  than  now  seems  to  be  available,  and  it  may  be  necessary 
in  order  to  meet  this,  charge  to  continue  the  present  levies 
beyond  1921. 

The  commission  has  not  yet  fully  determined  to  what  ex- 
tent the  continuance  of  both  of  these  levies  will  be  necessary 
in  order  to  provide  funds  to  match  the  federal  aid  available 
under  existing  laws,  and  while  we  believe  that  such  provision 
should  be  made  we  are  strongly  of  the  opinion  that  the  levies 
and  appropriations  for  road  purposes  should  under  present 
conditions  be  kept  doAvn  to  the  lowest  practicable  basis. 

The  Highway  Commission  has  furnished  us  with  an  esti- 
mate of  the  receipts  and  expenditures  for  the  years  1920,  1921 
and  1922.  After  some  consultation  we  have  made  some  amend- 
ments to  this  estimate,  and  as  so  amended  it  appears  in  full  in 
Appendix  XXIV  of  this  report. 

The  charge  for  surveys  amounts  to  about  $20,000  a  year 
and  seems  rather  high,  but  all  the  surveys  for  federal  aid 
projects  must  be  paid  for  by  the  state,  and  the  requirements  of 
the  federal  authorities  in  this  respect  are  very  stringent. 
The  state  has  received  equipment  in  the  form  of  trucks  and 
other  material  from  the  federal  government  to  the  value  of 
about  $1,500,000.00;  but  this  gift  involves  a  large  expendi- 
ture by  the  state  for  freight,  sheds,  packing  and  other  ex- 
penses which  will  amount  conservatively  to  $25,000  a  year  for 
the  three  years. 

The  overhead  maintenance  cost  of  the  Stanta  Fe  and  six 
district  offices  of  $106,000.00  is  not  excessive.  The  charge  of 
$323,000.00  a  year  for  maintenance  patrols  includes  the  cost 
of  maintenance  of  all  of  the  highways  built,  on  a  basis  of  keep- 
ing them  up  to  their  original  standard.  Whether  or  not  this 
estimate  can  be  reduced  and  the  roads  maintained  on  a  prop- 
er basis,  is  a  matter  which  the  legislature  should  carefully 
examine. 

It  is  undoubtedly  true  that  the  matter  of  road  maintenance 
has  not  been  enough  emphasized  in  the  past  in  the  plans  of  the 
IDghM-ay  Commission,  as  far  as  those  plans  have  been  made 
public.    The  present  program  of  the  Highway  Commission  con- 


SPECIAL  REVENUE  COMMISSION  93 

templates  a  3000  mile  road  system  in  the  state.  If  all  the 
funds  appropriated  to  the  state  under  federal  laws  are  made 
available  by  duplication  through  state  appropriations,  it  is  es- 
timated that  about  1500  miles  of  completed  roads  can  be  built 
including  the  roads  already  built  with  the  assistance  of  federal 
funds.  To  properly  maintain  these  roads  will  cost  from  $100 
to  $500  a  mile ;  so  it  is  probably  conservative  to  estimate  that 
these  1500  miles  would  cost  in  maintenance  from  $300,000  to 
$350,000  a  year.  The  present  plans  of  the  Highway  Commis- 
sion contemplate  the  building,  repair  and  maintenance  of  about 
1500  miles  of  road  in  addition  to  the  roads  built  with  federal 
aid  funds.  These  roads  will  be  constructed  in  co-operation 
with  the  counties,  and  in  forest  reserves  in  co-operation  with 
the  Forestry  Department.  "With  1500  miles  of  roads  finished 
under  the  present  program,  with  an  annual  fund  of  $500,000 
it  is  thought  that  the  whole  3000  miles  of  system  could  be 
properly  maintained ;  that  is  to  say,  that  the  1500  miles  of  high 
class  roads  could  be  kept  up,  and  1500  miles  more  of  other 
roads  thoroughly  put  in  shape  and  properly  wiaintained. 

We  are  of  the  opinion  that  the  road  program  of  the  state 
should  at  this  time  be  restricted  to  the  lines  above  indicated. 
We,  moreover,  believe  that  some  of  the  roads  already  con- 
structed and  noAV  being  constructed  with  federal  aid  are  of  a 
more  expensive  type  than  they  should  be.  But  after  con- 
.mllation  with  the  HighAvay  Commission  we  are  convinced  that 
the  general  policy  both  of  the  federal  government  and  of  the 
stale  authorities  is  now  to  adopt,  as  far  as  possible,  a  less  ex- 
pensive type-,  of  i-oad  conf.uuction  than  seems  to  have  been  ilie 
standard  when  the  federal  aid  program  was  inaugurated.  Many 
of  the  projects  for  new  construction  demonstrate  this,  and  it 
is  altogether  probable  that  with  the  funds  available  a  consider- 
ably greater  mileage  of  good  roads  can  be  built  than  woiuld 
have  been  the  case  if  the  the  original  expensive  standard  of 
construction  had  been  maintained. 

Under  the  existing  laws  the  federal  projects  are  fairly 
distributed  amongst  the  different  counties,  and  while  the  pres- 
ent federal  aid  program  when  completed  would  by  no  means 
furnish  all  the  highways  necessary,  it  would  result  in  a  fairly 
complete  road  system  for  the  whole  state.  Until  that  system 
is  completed  it  will  be  practically  impossible  for  the  counties 
to  spend  any  considerable  additional  sums  for  other  construc- 
tion, and  it  is  in  our  opinion  highly  desirable  that  the  counties 
keep  doAvn  their  expenditures  for  road  construction  during 
this  period  to  as  low  a  figure  as  possible. 

The  laws  do  not  now  contemplate  complete  co-operation 
between  the  State  Highway  Commission  and  the  county  author- 
ities, and  in  this  respect  should  be   improved.     From  every 


94  REPORT  OF  THE  NEW  MEXICO 

point  of  view  we  are"' of  the  opinion  that  the  county  road  super- 
intendents as  created  by  Chapter  99  of  the  Laws  of  1919,  are 
entirely  superfhiouse  and  should  be  discontinued.  We  think 
that  the  superinision  of  distinctly  county  road  construction  and 
nininlenanee,  both  independent  and  in  co-operation  with  the 
Uif;hway  Commission,  can  be  quite  adequately  met  by  the  ex- 
isting county  authorities  without  the  aid  of  the  superinten- 
dents authorized  by  that  law. 

We  therefore  recommend  that  Chapter  99  of  the  Laws  of 
1919  be  amended  so  as  to  abolish  these  county  road  superin- 
tendents, which  at  the  present  time  are  costing  about  $50,000 
a  year ;  and  that  it  be  amended  in  other  respects  so  as  to  bring 
about  a  more  complete  co-operation  between  the  county  author- 
ities and  the  Highway  Commission,  and  permit  the  county  com- 
missioners to  arrange  for  the  construction  and  maintenance 
of  county  roads  on  an  economical  and  efficient  basis. 

The  funds  to  be  derived  from  the  automobile  licenses 
should  constantly  increase,  and  this  fund  with  the  gasoline 
tax  and  other  pogsible  sources  of  revenue  outside  of  taxation 
should  be  sufficient  under  a  conservative  policy  to  bring  down 
the  tax  levies  for  road  purposes.  It  should  be  the  constant 
endeavor  of  the  state  authorities  to  reduce  these  road  levies 
to  as  low  a  point  as  possible. 

This  commission  finds  on  the  statute  books  laws  providing 
for  numerous  tax  levies  for  roads,  which  should  be  repealed. 
The  county  tax  levy  of  two  mills  provided  for  in  Chapter  99, 
Laws  of  1919,  is  intended  to  cover  the  necessary  levies  for 
county  road  construction  and  maintenance,  excepting  certain 
special  levies  that  have  been  provided  for  by  the  legislatures 
of  1917  and  1919  in  certain  counties.  The  provisions  which 
the  commission  believes  should  be  repealed  are  the  following: 
Sections  2642,  2645,  2673  and  2712  of  the  1915  Code;  also 
Section  24  of  Chapter  38  of  the  Law^s  of  1917. 

State  Health  Department  and  Child  Welfare  Board. 

The  legislature  of  1919  created  a  State  Health  depart- 
ment, providing  for  a  board  and  a  commissioner  of  health. 
Extensive  powers  were  granted  to  the  department  for  super- 
vising health  conditions  and  an  appropriation  of  $13,000  was 
made  for  carrying  out  the  purposes  of  this  act.  This  appro- 
priation is  found  to  be  inadequate  even  with  such  aid  as  is 
granted  by  the  federal  government.  The  Commission  is  im- 
pressed with  the  importance  of  the  work  of  this  department 
under  the  management  of  the  present  commissioner.  Dr.  Wal- 
ler, and  his  assistants.  Some  improvements  in  the  present  act. 
Chapter  85,  Laws  of  1919,  are  undoubtedly  necessary  in  order 
to  bring  about  the  best  result.     Such  improvements  should 


SPECIAL  REVENUE  COMMISSION  95 

provide  for  greater  co-ordination   of  local   and  state  health 
agencies. 

The  Child  AVelfare  board  also  created  by  the  last  legis- 
lature is  doing  a  splendid  service  and  in  its  first  year  has  given 
ample  proof  of  its  importance.  It  is  only  to  make  its  work 
more  effective  that  the  Commission  recommends  that  it  be 
made  a  division  in  the  department  of  health.  Its  work  will 
thus  be  kept  in  close  touch  with  health  activities  with  which 
it  should  be  associated,  and  duplication  of  work  and  expense 
will  be  avoided.  If  this  is  done  the  Child  Welfare  board  will 
not  lose  prospective  federal  aid,  in  view  of  the  amendment  to 
the  Shepard-Towner  bill  whereby  it  is  provided  that  the  work 
shall  be  "carried  on  in  such  a  manner  as  may  be  mutually 
agreed  upon  by  the  Federal  Board  and  any  state  receiving 
the  benefits  of  the  act. ' '  The  suggestion  that  the  child  welfare 
work  be  made  a  division  of  the  state  health  department  is  in 
line  with  the  practice  in  Florida,  Idaho,  Kentucky,  Mississippi, 
Montana,  Nebraska,  Rhode  Island,  Virginia,  West  Virginia, 
Wisconsin  and  many  other  states. 

It  may  be  said  that  this  arrangement  is  impracticable  be- 
cause "Child  Welfare"  includes  other  than  health  activities 
and  that  in  its  essential  features  it  belongs  to  the  educational 
functions  of  the  state.  If  so  there  is  additional  danger  of 
duplication  in  overhead  expenditures.  The  fact  stands  out 
that  if  the  child  welfare  board  is  kept  as  a  separate  state  de- 
partment, there  must  be  the  closest  possible  co-operation  of 
this  department  with  those  of  education  and  health. 

In  its  proposed  budget  the  state  health  department  will 
ask  for  a  total  appropriation  of  approximately  $48,000.  This 
is  large  when  compared  with  other  Rocky  Mountain  States 
considering  population  and  wealth.  Arizona  appropriates 
$19,700 ;  Colorado  $50,850 ;  Idaho  $58,300 ;  Montana  $72,988.76  ; 
Nevada  $10,000 ;  Utah  $41,000 ;  Wyoming  $12,000. 

The  organization  of  the  New  Mexico  health  department 
comprises  various  divisions  for  which  annual  appropriations 
are  asked  as  follows:  Commissioner  $6,820;  Vital  Statistics 
$3,780;  Preventable  Diseases  $5,280;  Child  Hygiene  and  Public 
Health  Nursing  $3,600;  Sanitary  Engineering  and  Sanitation 
$3,900;  Laboratory  (in  co-operation  with  the  University) 
$2,600 ;  Field  Agent  $4,500.  The  total  of  these  items  is  $30,480. 
In  addition  $510  is  asked  for  equipment;  $300  for  educational 
publicity  material ;  $4,510  for  other  )iiiscellaneous  expenditures, 
and  $11,994  for  co-operation  with  the  U.  S.  Government.  The 
grand  total  of  appropriations  amounts  to  $47,744  which  seems 
large  for  New  Mexico. 

Attention  is  called  to  the  number  of  employees  apparently 
required,  and  it  is  suggested  that  some  of  these  divisions  be 


96  REPORT  OF  THE  NEW  MEXICO 

consolidated.  It  appears  to  us  that  the  keeping  of  vital  sta- 
tistics could  be  managed  by  the  other  members  of  the  staff 
and  it  is  a  question  in  our  minds  whether  or  not  a  special  field 
agent  is  required.  Careful  inquiry  should  be  made  by  the  Gov- 
ernor in  making  the  annual  budget  as  to  the  necessity  for  so 
large  a  staff.  As  to  the  appropriation  of  $11,994  for  co-opera- 
tive work,  Ave  believe  that  arrangements  can  be  made  with 
the  several  counties  to  meet  the  federal  aid  granted  and  $10,000 
thus  provided  for.  If  these  changes  are  made  $32,000  would 
meet  the  requirements. 

It  must  not  be  overlooked  that  at  the  special  session  held 
in  1920,  the  legislature  provided  for  the  levy  of  not  to  exceed 
one-half  mill  in  each  county  for  health  purposes.  Here  again 
a  warning  must  be  given  that  there  is  danger  of  building  up 
an  over-manned  organization  that  Avill  prove  too  expensive 
in  comparison  with  services  rendered.  If  this  levy  is  made  in 
all  counties  it  is  possible  that  as  much  as  $150,000  may  be  spent 
in  local  health  work. 

The  act  referred  to  should  be  amended  so  as  to  provide  for 
a  county  health  department  to  have  charge  of  the  whole  county, 
including  incorporated  cities  and  towns.  No  separate  levies 
should  be  made  as  between  rural  and  urban  communities,  ex- 
cept in  cases  where  the  county  authorities  refuse  to  make  the 
health  levy.  Under  those  circumstances,  cities  should  be  per- 
mitted to  provide  for  the  service  separately. 

During  the  seventh  fiscal  year  ending  November  30,  1919, 
this,  the  state  health  department,  had  an  appropriation  of 
$9666.66  of  which  $9665.70  was  spent  as  follows:  Salaries 
$1885.82;  Travel  $1137.19;  Printing  and  stationery  $1515.83; 
Laboratory  $918.91;  Telephone  and  telegraph  $111.64;  Mis- 
cellaneous' $4096.31. 

For  the  eighth  fical  year  ending  November  30,  1920,  up 
to  the  present  date,  November  8,  1920,  there  has  been  expended 
a  total  of  $12,251.25  of  the  annual  appropriation  of  $13,000  for 
purposes  as  follows:  Salaries  $6,356.36;  Travel  $2534.31;  Print- 
ing and  stationery  $497.46 ;  Laboratory,  exclusive  of  salaries, 
$1419.37;  Telephone  and  telegraph  $310.56;  Miscellaneous 
$1133.19. 

During  the  present  year,  in  addition  to  the  .state  appro- 
priation of  $13,000,  there  has  been  available  funds  from  various 
outside  sources.  The  services  of  the  commissioner  have  been 
provided  for  by  the  United  States  Pu])lic  Health  Service,  his 
compensation  and  traveling  expenses  amount  to  $4376.00.  Sup- 
plementary compensation  and  traveling  expenses  in  the  amount 
of  $500  have  been  paid  by  the  U.  S.  Government  for  the  Chief 
of  the  Division  of  Sanitary  Engineering  and  Sanitation. 
Franking  privileges  for  distributing  printed  material  have  been 


SPECIAL  REVENUE  COMMISSION  9T 

allowed  in  the  amount  of  $650.00.  The  Red  Cross  Society  has 
paid  the  compensation  and  traveling  expenses  of  a  supervis- 
ing nurse,  $3,600  being  the  amiual  allowance  for  the  purpose. 
In  addition,  the  state  university  has  contributed  approximately 
$2000  for  the  maintenance  of  a  bacteriological  laboratory  in 
connection  with  the  department  of  Health  and  $250  has  been 
donated  to  the  department.  From  the  U.  S.  Government 
$1757.62  has  been  received  for  co-operative  work  in  connection 
with  venereal  diseases. 

Beginning  Avith  NoA^ember  1,  1920,  the  Interdepartmental 
Social  Hygiene  Board  will  detail  a  field  agent  at  a  salary  of 
$2,800  and  expenses  and  also  a  clerk ;  additional  Avorkers  may 
be  added  through  co-operation  AA'ith  this  agency.  In  addition, 
outside  help  to  the  amount  of  $9000  Avill  be  granted  by  the 
International  Health  Board  to  pay  salaries  of  three  county 
health  officers.  A  half  dozen  counties  have  made  levies  that 
Avill  yield  at  least  $30,000  for  health  Avork  Avithin  their  respec- 
ti\'e  borders.  It  aa'III  thus  be  seen  that  upon  the  present  basis 
the  State  Health  Department  will  have  available  annually  for 
the  next  year  or  tAA^o  approximately  $16,000.00  from  outside 
sources  for  state  work.  When  the  compensation  of  the  com- 
missioner is  assumed  by  the  state,  this  amount  Avill  be  reduced 
to  $12,000.00.  In  addition  there  Avill  be  from  $30,000  to  $40,000 
available  for  health  Avork  in  four  or  five  counties  of  the  state. 

It  should  be  noted  that  many  nurses  are  employed  in  va- 
rious cities  and  counties  of  the  state  Avhose  salaries  and  ex- 
penses are  paid  from  school  funds.  Some  nurses  are  employed 
by  Red  Cross  Societies  and  some  through  co-operation  between 
such  societies  and  county  or  city  authorities. 

These  various  actiAaties  to  bring  about  sanitary  and  Avhole- 
some  conditions  are  most  commendable  in  their  purposes  and 
indicate  the  groAving  appreciation  of  the  importance  of  health 
in  the  Avelfare  of  the  state.  It  m.ust,  hoAvever,  appear  to  all,  upon 
a  moment's  consideration  that  there  is  grave  danger  of  going 
beyond  reasonable  standards,  if  too  many  agencies  are  Avork- 
ing  along  the  same  lines  and  in  the  same  field.  Full  discussion 
of  this  problem  is  urged,  in  a  conference  of  those  interested 
to  be  called  by  the  Governor,  to  the  end  that  the  public's  sup- 
port of  these  agencies  in  taxes  and  private  donations  shall  not 
become  an  intolerable  burden. 

Mounted  Police. 

We  recommend  that  Article  12  of  the  Com])iled  LaAvs  of 
1915,  as  amended  by  Chapter  94  of  the  Session  LaAvs  of  1919, 
proAriding  for  a  state  force  of  mounted  police,  be  repealed. 
The  appropriation  for  this  purpose  is  $50,000.00  a  year  which, 
in  our  opinion,  is  in  the  main  an  uuAvarrantcd  expenditure 


98  REPORT  OF  THE  NEW  MEXICO 

and  should  be  discontinued.  We  are  of  the  opinion  that  the 
activities  of  tills  oi'ganization  have  to  some  degree  been  useful 
in  comiection  with  the  appreliension  and  conviction  of  cattle 
thieves.  It  has  also  been  customary  for  the  railroads,  and  some 
other  hirge  organizations,  to  secure  mounted  police  commis- 
sions for  their  watchmen  and  inspectors,  which  has  undoubted- 
ly added  desirable  authority  to  such  officers. 

We  suggest  that  with  the  repeal  of  the  mounted  police 
laws  a  new  law  he  passed  permitting  the  appointment  by  the 
Governor  of  not  more  than  three  state  marshalls,  to  be  re- 
sponsible to  the  Governor  and  paid  by  the  state  a  salary  of 
not  more  than  $2,500  per  annum  each,  and  providing  for  a 
contingent  fund  of  not  more  than  $2500.00  per  annum;  each 
officer  to  have  the  authority  now  vested  in  the  mounted 
police. 

We  further  recommend  that  by  such  new  law  the  Gover- 
nor shall  have  authority,  whenever  in  his  judgment  he  deems 
it  necessary,  to  designate  deputy  state  marshalls  who  shall 
serve  without  pay  from  or  expense  to  the  state ;  it  being  pro- 
vided that  such  officers  shall  be  commissioned  by  the  Governor 
only  when  he  is  convinced  that  they  may  be  necessary  to  pre- 
serve public  order. 

It  should  also  be  provided  that  these  deputy  state  marshalls 
may  be  removed  by  the  Governor  for  any  cause.  In  this  way 
we  believe  that  the  whole  question  of  mounted  police  both 
from  the  standpoint  of  economy  and  efficiency  would  be  fairly 
adjusted. 

Supreme  Court. 

Your  commission  is  reliably  informed  and  believes  it  to 
be  a  fact  that  there  is  on  hand  a  definite  movement  looking 
to  the  increase  of  the  State  Supreme  Court  to  five  members  by 
the  coming  legislature.  We  are  convinced  that  no  such  move  is 
favored  by  the  members  of  the  court  itself,  but  that,  on  the 
contrary  they  would  be  against  it.  There  is  at  this  time  no  need 
whatever  for  an  increase  in  the  personnel  of  this  court  and 
the  increased  cost  which  Avould  amount  to  about  $15,000  per 
annum  would  be  entirely  unwarranted  and  properly  resented 
by  the  taxpayers.  The  coui-t  as  at  pi-esent  constituted  is  amply 
able  to  care  for  all  the  business  that  comes  before  it. 

State  Boards  With  Independent  Incomes. 

The  following  boards  receive  no  appropriations,  each  de- 
riving the  necessary  income  from  fees  and  licenses:  Bar  Exam- 
iners. Medical  Examiners,  Dental  Examinoi's,  Pharmacy,  Op- 
tometry, Osteopathy  and  Embalmers.  All  of  these  boards  handle 


SPECIAL  REVENUE  COMMISSION  99 

their  ovm.  funds  except  the  Board  of  ^Medical  Examiners  which 
turns  all  receipts  into  the  State  Treasury  and  makes  all  dis- 
bursements upon  vouchers.  It  might  be  wise  in  order  to  secure 
uniformity  and  centralization  of  accounting  to  make  a  general 
requirement  of  this  sort  to  apply  to  all  boards. 

(Note:     See  Appendices  VII,  XV,  XVI,  X^aII,  XXIV, 

XXV.) 


CHAPTER  VI. 
STATE  INSTITUTIONS  AND  LAND  OFFICE. 

Page 

Institutional  costs  '. 101 

Penitentiary  103 

State  educational  institutions  , 107 

State  Land  Office  107 

Analysis  of  status  of  state  lands 112 

Maintenance  fund 113 

State  colleges  and  schools 114 

Property  of  three  institutions 118 

Students : ". 119 

Distribution  of  students 119 

Unit  cost  of  maintenance  120 

Courses  of  study : 120 

Enrol  1  ment  and  attendance 120 

Recommendations  as  to  consolidation  121 

The  Spanish  American  Normal  School  121 

Courses  in  the  Normal  Schools 122 

Proposed  constitutional  amendment 123 


SPECIAL  REVENUE  COMMISSION  •     101 

CHAPTER  VI. 

INSTITUTIONAL  COSTS. 

It  has  not  been  possible  for  the  Special  Revenue  Commis- 
sion in  the  time  and  with  the  means  at  its  disposal  and  with 
the  many  other  duties  directly  delegated  to  it  to  make  an  ex- 
haustive or  thorough  survey  of  the  various  state  institutions. 
But  no  statement  of  the  revenue  needs  of  the  state  would  be 
even  approximately  complete  without  a  resume  of  the  condi- 
tions and  requirements  of  these  institutions,  which  constitute 
so  important  a  part  of  our  governmental  establishment,  neces- 
sitate so  large  annual  appropriations  and  are  so  interwoven 
with  the  social  and  political  life  of  our  people. 

In  the  appendix  of  this  report  are  various  compilations  of 
financial  data,  giving  the  receipts  and  payments  for  the  years 
1915,  1916,  1917,  1918  and  1919  of  these  various  institutions. 
These  tables  show  totals  for  all  the  thirteen  institutions  and 
also  in  groups  classified  as  follows: 

I.  EDUCATIONAL. 

1.  Agricultural  College 

2.  University. 

3.  School  of  Mines. 

4.  Las  Vegas  Normal  School. 

5.  Silver  City  Normal  School. 

6.  El  Rito  Normal  School. 

7.  Military  Institute. 

II.  CHARITABLE. 

1.  Miner's  Hospital. 

2.  Deaf  and  Dumb  Asylum.. 

3.  Blind  Asylum. 

4.  Insane  Asylum. 

III.  PENAL. 

1.  Penitentiary. 

2.  Reform  School. 

There  are  also  tables  grouping  the  income  and  cost  pay- 
ments of  the  first  group  of  "Educational  Institutions"  into 
subheads  as  follows: 

A. — 1.  Agricultural  College. 

2.  University. 

3.  School  of  Mines. 
B. — 1.  Las  Vegas  Normal. 

2.  Silver  City  Normal. 

3.  El  Rito  Normal. 
C. — Military  Institute. 


102  REPORT  OF  THE  NEW  MEXICO 

This  sub-classification  is  for  reasons  which  Avill  subsequent- 
ly appear  in  this  report. 

There  is,  we  believe,  no  general  disposition  on  the  part  of 
the  citizens  of  New  Mexico  to  question  the  necessity  of  main- 
taining at  public  expense  the  institutions  classed  above  as 
"Charitable"  and  "Penal"  Institutions,  that  is  to  say,  the 
Insane  Asylum,  the  Deaf  and  Dumb  Asylum,  the  Blind  Asy- 
lum, the  Miner's  Hospital,  the  Penitentiary  and  the  Reform 
School.  The  only  possible  exception  that  might  be  made  to 
this  statement  is  as  it  relates  to  the  Miner's  Hospital  at  Raton, 
an  institution  which,  has  been  established  by  the  state  in  the 
midst  of  the  coal  fields  of  Colfax  County  and  is  maintained 
at  a  total  cost  of  about  $25000  a  year,  about  $15000  of  which 
comes  from  direct  legislative  appropriations  and  $4000  to  $5000 
from  the  Income  from  State  Lands.  The  reports  of  the  Insti- 
tution show  that  a  considerable  sura  is  derived  from  the  fees 
of  pay-patients  and  that  the  number  of  charity  patients  main- 
tained is  comparatively  small.  The  large  coal  companies  which 
practically  cover  the  coal  operations  of  Colfax  county  main- 
tain their  own  hospitals.  These  are  highly  efficient  and  well 
conducted  and  their  benefits  are,  as  we  understand,  open  to 
all  company  employees  upon  the  payment  of  moderate  fees. 
This  amounts  to  a  health  insurance. 

We  apprehend  that  an  investigation  would  show  that  the 
Miner's  Hospital  at  Raton  does  not  care  for 'many  disabled 
miners  but  that  it  is  more  in  the  nature  of  a  local  institution. 
While  it  is  probable  that  the  institution  should  be  maintained 
as  a  state  institution  so  as  to  retain  the  benefits  accruing  from 
the  grant  of  one  hundred  thousand  acres  of  land  made  by  the 
Ferg\ison  and  the  Enabling  Acts  we  do  not  believe  that  the 
state  is  justified  in  continuing  direct  legislative  appropria- 
tions on  the  present  scale. 

The  Deaf  and  Dumb  Asylum  is  established  at  Santa  Fe 
and  the  Blind  Asylum  at  Alamogordo.  The  Reform  School 
is  at  Springei".  The  maintenance  of  two  separate  institutions 
for  the  Deaf  and  Dumb  and  the  Blind  is  not  in  our  opinion, 
necessary.  In  many  states  of  much  greater  resources  than 
ours  the  deaf,  the  dumb  and  the  blind  are  cared  for  and  edu- 
cated in  the  same  institution  and  it  is  generally  accepted  by 
those  who  have  made  a  study  of  this  phase  of  public  charity 
that  better  results  can  be  obtained  by  conducting  these  neces- 
sary public  functions  under  one  management.  It  is  certain, 
too,  that,  with  us,  material  economies  as  well  as  greater  effi- 
ciency could  be  obtained  by  uniting  the  two  institutions  into 
one. 


SPECIAL  REVENUE  COMMISSION  103 

The  total  income  of  the  Deaf  and  Dumb  Asylum  at  Santa 
Fe  for  the  year  1918  was  $30,561.65  and  of  the  Blind  Asylum 
at  Alamogordo  $39,646.08.  This  makes  a  total  of  $69,207.73 
for  the  two  institutions  for  that  year  of  which  $53,624.36  came 
from  direct  state  appropriations  and  about  $15,000  from  In- 
stitutional Lands. 

Details  as  to  the  Income  and  Cost  payments  of  these  insti- 
tutions appear  at  pp.  118  and  119  of  the  Traveling  Auditor's 
last  printed  report  and  for  1919  in  the  appendix  for  this  re- 
port. A  study  of  these  statements  must  convince  any  one  that 
material  economies  in  administrative  expenses  could  be  at  once 
effected  by  consolidating  these  institutions. 

According  to  the  estimates  made  by  the  Traveling  Audi- 
tor in  1918  the  physical  valuation  of  the  buildings  and  grounds 
of  the  Blind  Asylum  and  Deaf  and  Dumb  was  $45,000  and 
$62,000,  respectively.  We  believe  that  the  best  interests  of  the 
public  would  be  served  by  consolidating  the  two  institutions 
at  Alamogordo  and  that  the  cost  of  the  installation  of  a  new 
building  or  an  addition  to  the  present  buildings  there  M'ould 
soon  be  met  by  the  saving  effected  through  the  consolidation, 
(a)  We  further  recommend  as  a  measure  of  economy  and  ad- 
ministrative efficiency  that  the  Reform  School  now  located 
at  Springer  be  removed  to  Santa  Fe  and  that  the  buildings 
now  used  for  the  Deaf  and  Dumb  Asylum  be  adopted  for  the 
use  of  this  institution.  We  believe  that  the  administration  of 
this  institution  could  be  brought  more  in  line  Avith  modern 
ideals  and  that  it  could  be  made  to  include  more  of  the  features 
of  an  Industrial  School,  through  such  a  change. 

We  recommend  that  legislation  to  bring  about  these  con- 
solidations be  enacted. 

Penitentiary. 

Your  commission  is  firmly  of  the  opinion  that  merely  from 
an  economic  point  of  view  and  leaving  out  of  consideration  for 
the  moment  the  social  and  moral  aspects  of  the  matter,  the 
efficient  and  proper  conduct  of  the  state  penitentiary  is  a 
matter  of  the  most  vital  importance  to  every  tax  payer  and 
and  citizen  of  the  state.  We  are  of  the  opinion  that  every  step 
taken  towards  a  more  efficient  management  of  that  institution, 
towards  a  management  more  in  conformity  with  the  ideals  and 
standards  reached  in  many  similar  institutions  in  other  states 
and  other  countries  will  be  at  once  reflected  in  the  social  and 
economic  conditions  of  the  people  of  the  state  as  a  Avhole. 
We  are  convinced  that  the  Institution  is  not  being  conducted 
and  never  has  been  conducted  in  a  manner  anywhere  near 
approaching  the  proper  standard  now  attainable  for  such  in- 
stitutions, or  anywhere  near  as  efficiently  as  might  readilv 


104  REPORT  OF  THE  NEW  MEXICO 

bo  attained  hero  and  now  if  the  penitentiary  were  taken  out 
of  polities  and  a  reasonably  up  to  date  system  of  administration 
adopted.  We  are  of  the  opinion  that  efficiency  never  can  be 
attained  until  the  penitentiary  management  is  taken  entirely 
and  completely  out  of  politics.  In  making  this  statement  we 
do  not  wish  to  cast  any  stigma  on  the  personnel  of  any  manage- 
ment of  the  institution,  past  or  present.  There  have  been  Sihd 
are  now  excellent  men,  men  of  the  highest  standing,  connected 
with  the  management  of  this  institution,  but  they  are  greatly 
handicapped  in  their  efforts  to  put  the  institution  on  a  sound 
footing  because  of  the  fact  that  the  wardenship  and  other 
administrative  jobs  are  and  ahvays  have  been  looked  upon 
as  political  perquisites.  Whatever  may  be  said  as  to  the  "prac- 
tical" necessity  of  considering  the  partisan  and  political  bear- 
ings of  appointments  to  other  state  positions  it  is,  in  our  opin- 
ion, not  only  the  height  of  folly  from  an  economic  viewpoint 
but  a  positive  sin  from  a  social  and  moral  point  of  view  to 
permit  any  considerations  except  the  highest  considerations 
of  fitness  and  experience  to  enter  into  the  selection  of  men 
who  are  to  care  for,  guard,  guide,  and  instruct  those  unhappy 
mortals  whom  the  state  under  its  laws,  undertakes  to  reform 
and  make  into  good  citizens.  We  believe  that  the  state  peni- 
tentiary, under  present  conditions,  is  on  the  whole  not  a  re- 
formatory establishment  in  any  sense  of  the  word. 

The  penitentiary  should  be  liberally  provided  for.  The 
state  appropriation  of  about  $70,000  per  year  is  certainly  not 
extravagant.  This  appropriation  with  what  is  derived  from  state 
lands  and  convicts'  earning  make  up  the  total  of  approxi- 
mately $125,000  which  is  the  average  annual  cost  of  maintain- 
ing the  institution.  The  present  Board  recently  had  a  quali- 
fied expert  make  a  thorough  examination  of  the  institution 
and  a  full  report  made  under  the  auspices  of  the  Executive 
Committee  of  the  National  Committee  on  Prisons  and  Prison 
Labor  has  been  compiled  and  Avill  be  presented  by  the  Prison 
Commission  to  the  legislature.  We  have  had  the  advantage  of 
seeing  this  report  since  we  wrote  the  above  general  conclusions 
and  we  wish  to  most  emphatically  endorse  the  recommendations 
made  in  that  report. 

We  herewith  quote  certain  parts  of  that  report  and  make 
them  a  part  of  our  own  report. 

' '  General  Administration. 

Modern  methods  of  training  prisoners  require  that 
the  staff  of  the  institution  be  competent  to  act  as  teachers 
and  foremen,  rather  Ihan  guards  and  turnkeys. 

Men  capable  of  training  prisoners  in  hygienic  modes 
of  living  and  in  efficient  work  habits  cannot  be  secured 


SPECIAL  REVENUE  COMMISSION  105 

for  the  sum  of  $45  per  month,  with  food  and  uninviting 
living  quarters.  Nor  can  the  right  results  be  expected  if 
the  Superintendent's  tenure  of  office  depends  upon  his  po- 
litical affiliations  and  the  length  of  the  term  of  the  Gover- 
nor appointing  him,  rather  than  on  his  knowledge  of 
modern  scientific  penology  and  the  returns  he  is  making 
to  the  state  in  reclaimed  humanity. 

If  politics  are  to  be  the  only  administrative  factor 
in  making  staff  appointments,  it  is  hopeless  to  look  for 
efficient  business  administration. 

The  National  Committee  on  Prisons  and  Prison  Labor 
calls  attention  to  the  methods  being  developed  in  New 
Jersey  where  a  non-partisan  Board  is  in  control  of  all 
the  penal  and  eleemosynary  institutions,  the  executive 
officers  retaining  their  positions  despite  changing  political 


regimes. 


The  Committee  therefore  recommends: 

First. — That  a  non-partisan  Board  be  created  by  the 
legislature  to  have  control  over  all  penal  and  eleemosynary 
institutions  in  New  Mexico. 

Second. — That  the  salaries  of  the  Executive  Officers 
of  this  Board,  the  wardens  superintendents  and  staffs  of 
institutions  be  made  commensurate  Avith  those  which  could 
be  earned  if  the  individuals  were  employed  in  private  un- 
dertakings. ' ' 

The  report  recommends  the  employment  of  a  larger  and 
more  efficient  staff  but  states  that  the  extra  expenditure  in- 
voleved  can  easily  be  offset  by  the  increase  revenue  from  tlie 
labor  of  the  prisoners  if  the  men  are  stimulated  to  greater 
efficiency  by  reward  for  results  obtained. 

Continuing,  the  report  says: 

"The  creation  on  the  books  of  the  State  Comptroller 
(State  Auditor)  of  a  fund  known  as  the  prison  industrial 
fund  in  which  shall  be  deposited  all  moneys  paid  for  pro- 
ducts and  labor  from  the  penal  institutions  and  from 
which  shall  be  drawn  money  to  pay  for  raw  materials,  the 
cost  of  operation  and  transportation  charges.  This  fund 
shall  also  be  available  for  the  payment  of  interest  on 
moneys  secured  thro'ugh  bond  issue  or  loans  for  the  instal- 
lation of  machinery  and  the  equipment  of  work  shops, 
brick  plants,  etc.,  and  the  redem])tion  when  due  of  such 
bonds  or  certificates  of  indebtedness  as  may  be  issued  for 
the  purpose. 


106  REPORT  OF  THE  NEW  MEXICO 

The  legislature  should  authorize  the  issue  of  bonds 
or  other  certificates  of  indebtedness  to  the  amount  of 
$200,000  at  the  current  rate  of  interest  to  be  a  first  lien 
on  the  prison  industrial  fund." 

The  above  recommendations  we  heartily  endorse,  as  we  do 
the  plans  of  the  committee  for  the  improvement  of  the  peni- 
tentiary equipment  and  installation. 

These  proposed  plans  are  in  brief: 

1.  The  remodelling  of  the  present  cell-houses  by  throw- 
ing tAvo  cells  into  one. 

2.  The  building  of  a  new  dormitory  building  to  accom- 
modate abolit  sixty  men. 

3.  The  remodelling  of  the  present  central  building  for 
a  physical  plant. 

4.  A  separate  institution  for  women  prisoners. 

5.  A  new  superintendent's  residence  outside  the  walls. 

6.  A  new  administration  building. 

7.  The  establishment  of  a  new  model  brick  plant  with 
a  capacity  of  from  25,000  to  40,000  bricks  per  day 
either  at  the  present  institution  or  near  the  clay 
pits  to  cost  about  $75,000. 

8.  The  establishment  of  the  cement  block  industry. 
Cost  about  $6800. 

9.  The  establishment  of  ideal  block  manufacture.  Cost 
about  $5000. 

10.  The  installation   of  carpenter  and  machine   shops. 
Cost  about  $50,000. 

11.  i\Ianufacturing  of  automobile  tags. 

12.  Equipment  for  new  blacksmith  shop  and  foundry. 

It  is  not  proposed  that  all  these  improvements  be  at  once 
installed  nor  would  it  be  possible  without  the  expenditure  of 
large  sums  of  money,  but  it  is  thought  by  the  committee  and 
Ave  believe  that  with  the  expenditure  of  $200,000  and  the  es- 
tablishment of  the  prison  industrial  fund  such  increases  in  the 
net  earnings  of  the  institution  could  be  brought  about  as  would 
enable  the  complete  installation  of  the  improvements  contem- 
plated and  the  establishment  of  the  new  program  of  adminis- 
tration and  industi'ial  activities,  without  greatly  increasing  the 
annual  maintenance  appropriations  by  the  state. 

We  hope  sincerely  this  may  be  brought  about  and  we  com- 
mend the  legislature's  most  careful  consideration  of  the  very 
illuminative  report  of  the  National  Committee  on  Prisons  and 
Prison  Labor  which  we  believe  should  and  will  mark  the  be- 
ginning of  a  new  epoch  in  the  prison  administration  of  New 
Mexico. 


SPECIAL  REVENUE  COMMISSION  107 

State  Educational  Institutions  and  The  Land  Office. 

From  the  standpoint  of  enlightenment,  civic  health  and 
social  progress  the  past  is  dead,  or  ought  to  be,  except  insofar 
as  it  may  be  invoked  for  the  purpose  of  improving  the  present 
and  safeguarding  the  future.  The  present  is  the  great  reality. 
It  is  now  that  we  are  living,  but  no  present  can  approach  per- 
fection without  such  an  insight  into  the  near  and  remote 
future  as  will  enable  us  to  properly  mold  present  conditions.  In 
great  and  little  things,  personal  and  political,  it  is  right  to 
search  the  past  for  causes  and  probe  into  the  future  for  re- 
sults. This  should  be  done  with  neither  rancor  or  bitterness  in 
one  case,  nor  too  extreme  idealism  in  the  other,  and  it  should 
primarily  be  done  for  the  purpose  of  bringing  about  present 
conditions  which  are  right  and  will  endure. 

No  system  of  government  or  party  can  long  endure  if  it  is 
controlled  primarily  by  a  restricted  and  limited  expediency. 
Without  vision  and  perspective,  government,  as  life,  must  be 
a  dismal  failure. 

Your  commission  is  not  inclined,  nor  does  it  deem  it  to  be 
its  duty,  to  discuss  in  detail  the  past  actions  of  any  of  the  state 
departments,  and  is  only  doing  so  insofar  as  it  affects  their 
present  status  and  their  future  relation  to  the  p^iblic  welfare. 
The  present  status  of  the  land  office  and  the  state  educational 
institutions — as  of  all  other  state  institutions — should,  we  feel, 
be  our  fundamental  inquiry.  After  considering  the  matter  from 
all  its  angles  and  for  a  long  time,  we  are  strongly  of  the  opinion 
that  from  an  administrative  standpoint,  the  land  office  and 
the  educational  institutions  must  be  linked  together  in  any 
intelligent  disucssion  as  to  present  conditions  and  proposed 
administrative  changes. 

The  federal  land  grants  made  to  the  territory  and  state  of 
New  Mexico  by  the  Ferguson  Act,  and  the  Enabling  Act, 
amount  approximately  to  12,000,000  acres.  (See  Appendix  XX. 
List  of  grants  by  both  acts.)  This  great  bequest  was  in  the 
nature  of  afi  endowment  for  various  institutions  and  funds  and 
the  granting  acts  imposed  strict  conditions  on  the  administra- 
tion of  the  trust  they  created  .  The  fundamental  purpose  for 
making  these  grants  was  to  assist  in  the  endowment  of  educa- 
tional, penal,  reformatory  and  other  institutions  in  New 
Mexico,  and  was  a  continuation  of  a  policy  long  ago  adopted 
by  the  federal  government  in  other  states.  While  the  adminis- 
trators of  this  great  trust  must  give  due  weight  to  considera- 
tions of  hoAv  the  disposal  of  the  land  is  to  affect  the  business 
and  economic  interests  of  our  people,  their  controlling  guide 
in  that  administration  should,  we  are  convinced,  always  he 
the  best  interest  of  the  beneficiaries  of  the  trust  for  which  the 
state  is  acting  as  trustee.    This  point  of  view  has  not,  avc  be- 


108  REPORT  OF  THE  NEW  MEXICO 

lieve,  been  constantly  enough  borne  in  mind  by  those  entrusted 
witli  the  selection,  administration  and  disposal  of  these  lands. 
On  the  contrary,  a  study  of  the  history  of  the  territorial  and 
state  land  offices  indicates  that  the  office  has  not  kept  this 
aspect  of  the  functions  sufficiently  in  mind.  This  is  a  matter 
of  very  great  importance  to  the  taxpayer  because  every  cent 
the  state  might  have  earned  but  has  failed  to  get  out  of  these 
lands,  has  had  to  be  made  up  by  direct  tax  levies  on  his  prop- 
erty. , 

One  of  the  main  causes^,  we  feel,  for  this  situation  is  that 
there  has  been  no  co-ordination  betAveen  the  administration 
of  the  lands  granted  for  specific  purposes,  and  that  of  the 
institutions  for  the  support  of  which  the  grants  were  made. 
In  any  other  line  of  business  such  a  lack  of  co-ordination  would 
undoubtedly  lead  to  inharmonious  and  inefficient  results.  That 
is  apparent  on  the  face  of  it. 

Convinced  as  we  are  of  this  truth  we  have  attempted  in 
studying  problems  of  public  institutional  and  land  management 
in  the  state,  to  arrive  at  some  methods  whereby  what  we  are 
convinced  is  this  fundamental  defect  in  the  present  system 
can  be  adjusted.  We  feel  that  the  two  questions  are  so  inter- 
woven as  to  make  it  necessary  to  consider  them  as  one. 

The  State  Land  office  has  for  a  long  time  been  a  subject 
of  much  comment  and  considerable  criticism.  Recently  a  care- 
ful examination  of  the  present  condition  of  that  office  as  far  as 
the  time  and  means  at  our  disposal  would  permit  has  been 
made  through  this  commission,  by  unprejudiced  and  competent 
examiners.  This  examination  has  not  been  in  the  nature  of  an 
audit  but  rather  of  a  survey  of  the  present  condition  of  the 
department.  A  complete  audit  even  since  statehood  would  take 
a  long  time  and  a  considerable  sum  of  money.  Neither  the  time 
nor  the  money  is  available  to  this  commission.  The  final  re- 
port of  the  above-mentioned  survey  is  not  yet  ready  but  will 
be  before  the  legislature  meets  and  will  be  made  avalable  in 
printed  form.  A  preliminary  statement  as  to  the  office  may, 
however,  now  be  made. 

The  organization  of  the  land  office  consists  of  the  commis- 
sioner, assistant  commissioner,  eight  men  employees  and  six 
women  employees.  At  present  the  work  is  so  arranged  that  all 
the  office  work  is  under  the  direct  supervision  of  Mr.  Griffin, 
the  chief  clerk;  and  the  Assistant  Commissioner,  Captain 
Muller,  very  largely  exercises  the  functions  that  should  be 
exercised  by  the  commissioner.  The  latter  is  away  a  great  deal 
of  the  time  and  practically  no  questions  are  put  up  to  him  for 
decision. 

In  general  it  may  be  said  that  selections  are  under  the 
supervision  of  Capt.  Muller  and  Mr.  Griffin;  oil  leases  under 


SPECIAL  REVENUE  COMMISSION  109 

Mr.  Barker;  agricultural  and  grazing  leases  under  Mr.  Paul; 
sales  of  land  under  Mr.  March;  and  that  each  of  these  em- 
ployees acts  to  a  large  extent  on  his  own  initiative  without 
much  of  any  check  or  supervisory  direction. 

The  office  work  in  connection  Avith  land  matters  is  gen- 
erally handled  in  a  satisfactory  manner  although  there  are 
some  details  which  should  be  and  probably  will  be  amended. 
The  tract  books  now  in  use  are  very  poorly  designed,  and  new 
ones  should  be  installed.  This  will  cost  considerable  money 
but  should  be  done.  Mr.  Ervien,  the  first  commissioner, 
evolved  a  plan  requiring  applicants  for  the  purchase  of  land 
to  file  a  deposit  as  evidence  of  good  faith.  The  use  of  the 
funds  resulting  from  these  deposits  has  caused  a  great  deal  of 
comment  throughout  the  state.  This  deposit  until  recently  was 
by  law  ten  per  cent  of  the  purchase  price,  but  under  the  new 
law,  except  for  lands  given  for  the  benefit  of  the  Grant  and 
Santa  Fe  counties  railroad  bonds,  it  has  been  reduced  to  five 
per  cent. 

As  is  well  laiown,  this  money  has  all  along  been  held  in 
escrow  for  the  depositors  and  at  one  time  amounted  to  nearly 
three  quarters  of  a  million  dollars.  During  the  past  year  or 
so  it  has  been  reduced  so  that  on  October  1st  of  this  year  it 
amounted  to  $317,615.25  (including  amounts  deposited  on  oil 
leases).  According  to  the  statement  of  the  Assistant  Commis- 
sioner, it  is  now  the  policy  of  the  office  to  refund  on  applica- 
tion to  the  depositor  not  only  the  difference  between  the  ten 
per  cent  and  the  five  per  cent,  but  also  the  total  amount  of 
the  deposit  on  condition  that  the  applicant  leases  the  land,  ex- 
cept in  cases  where  the  application  is  for  a  small  parcel  of 
ground  not  contiguous  to  other  state  lands.  If  this  is  so  it  is 
a  good  policy  and  should  be  pursued.  It  is  certainly  a  fact  that 
even  though  the  office  may  now  be  making  refunds  of  these 
escrow  deposits,  the  bankers  and  perhaps  others  have  profited 
through  the  use  of  this  money  in  the  past.  There  is  no  reason 
why  the  banks  should  not  now  be  required  to  pay  interest  on 
these  funds.  Undoubtedly  a  good  plan  would  be  to  refund 
the  total  amount  and  take  surety  bonds  in  place  of  the  de- 
posits. It  is  well  known  that  the  land  office  ilself  has  not 
collected  interest  on  this  ecrow  fund.  It  is  now  stated  by  the 
land  office  that  the  office  should  have  collected  interest  and 
returned  it  to  the  depositors.  It  is  certain  that  the  fact  that 
interest  was  not  collected  on  the  funds  has  caused  reflection 
upon  the  commissioner;  the  reflection  being  1bat  the  banks 
were  paying  him  interest,  or  that  he  was  profiting  politically 
as  a  result  thereof.  There  is  no  doiibte  in  the  world  that  the 
commissioner  has  profited  politicallv  in  this  wny. 

There  has  been  a  good  deal  of  discussion  and  controversy 


110  REPORT  OF  THE  NEW  MEXICO 

as  to  what  the  policy  of  the  office  should  be  in  regard  to  the 
selling  or  leasing  of  lands.  Mr.  Ervion  Avas  strongly  of  the 
opinion  that  as  much  land  as  possible  should  be  sold,  but  it 
is  apparently  the  policy  of  the  present  management  to  endeavor 
to  lease  rather  than  sell.  We  are  of  the  opinion  that,  always 
bearing  in  mind  that  the  creation  of  endowment  funds  for  the 
support  of  trusts  created  by  Congress,  is  the  fundamental 
duty  of  the  office,  a  combination  of  selling  and  leasing  policy 
is  desired. 

The  sales  themselves  should  be  conducted  so  as  to  bring 
the  greatest  possible  benefit  to  these  trust  funds.  This  should 
be  the  controlling  motive.  As  they  are  now  conducted,  the 
applicant  has  by  all  means  the  greatest  opportunity  to  secure 
the  land  at  his  own  figue.  If  he  has  made  any  improvements 
on  the  land,  the  purchaser  must  pay  him  for  the  value  thereof; 
if  the  improvements  are  extensive  it  is  almost  a  foregone  con- 
clusion that  the  applicant  will  get  the  land  at  the  minimum 
figure.  On  the  other  hand  it  is  not  a  general  rule  to  require  de- 
posits of  bidders  at  land  sales.  This  is  unfair  to  the  applicant 
for  two  reasons;  first,  he  made  a  deposit  when  he  made  appli- 
cation for  the  land,  and  this  may  have  been  four  or  five  years 
before  the  sale ;  second,  irresponsible  persons  may  thus  he  per- 
mitted to  bid  and  run  up  the  price.  The  policy  of  the  office  in 
refunding  deposits  is  a  good  one,  but  it  should  be  required 
that  all  bidders  at  a  public  sale,  prior  to  the  time  of  sale,  make 
a  deposit  of  at  least  the  minimum  bid.  This  is  the  practice 
followed  in  the  sale  of  oil  leases  and  there  is  no  reason  why  it 
should  not  be  folloAved  in  the  sale  of  lands. 

It  is  suggested  that  it  would  be  advisable  to  enact  a  law 
making  it  a  misdemeanor  for  bidders  to  conspire  to  suppress 
bidding.  Another  safeguard  to  the  state  would  be  to  require 
a  minimum  bid  which  would  be  ample  compensation  for  the 
land  in  case  there  -was  but  one  bid  at  the  auction.  This  per- 
haps cannot  be  done  properly  until  all  the  state  lands  have 
been  classified,  although  it  is  believed  that  the  land  office 
could  through  its  present  knowledge  of  the  value  of  lands  in 
the  different  sections,  raise  the  minimum  bid  so  as  to  ac- 
complish approximately  the  desired  result. 

There  have  been  a  great  many  different  policies  followed 
in  the  issuance  of  oil  leases.  These  have  been  changed  from 
time  to  time  because  of  the  pressure  of  public  opinion.  The 
original  policy  seems  to  have  been  to  make  as  many  oil  leases 
to  cover  as  large  an  area  as  possible,  and  little  care  or  discre- 
tion w'as  exercised  in  their  issuance.  The  early  leases  were 
made  in  typewritten  form  and  there  were  three  different  vari- 
ties.  Some  of  these  provided  for  the  payment  of  about  $1000 
for  the  first  year  Avith  payment  for  subsequent  years  of  one 


SPECIAL  REVENUE  COMMISSION  111 

hundred  dollars  a  section ;  others  permitted  the  payment  of  a 
small  sum  for  the  first  two  years.  Most  of  these  early  leases 
contained  no  provision  for  drilling  of  a  Avell  within  a  specified 
period  or  other  evidence  of  good  faith  on  the  part  of  the 
lessee,  nor  did  the  state  reserve  any  set-offs  therein.  This 
failure  to  reserve  set-offs  for  the  state  in  the  lands  leased 
for  oil  is  a  striking  demonstration  of  the  lack  of  foresight  and 
care  in  disposing  of  such  important  rights  in  state  lands..  It 
is  true  that  if  oil  be  discovered  on  state  lands  covered  by  leases, 
nowhere  near  as  much  would  be  realized  therefrom  as  if  the 
leases  had  been  made  with  proper  care  and  discrimination. 

There  have  been  five  different  kinds  of  printed  leases, 
ranging  in  terms  from  the  most  liberal  to  the  most  exacting. 

The  early  leases,  as  is  well  known,  were  not  advertised, 
and  it  appears  that  certain  persons  holding  such  leases  felt 
that  they  were  not  safe  in  their  leaseholds  and  therefore  asked 
the  state  to  advertise  such  leases  for  sale.  Capt.  Muller  states 
that  the  state  land  office  did  so  advertise  six  or  eight  such 
leases,  but  that  in  doing  so  it  laid  itself  open  to  a  very  em- 
barassing  situation  as  follows:  Assume  that  a  lessee  was  not 
able  to  bid  as  high  as  a  competitor,  and  therefore  lost  his 
lease.  The  original  lessee,  however,  finding  himself  beaten, 
could  take  the  stand  that  he  had  the  original  lease  and  that 
he  would  not  give  it  up  inasmuch  as  it  had  never  been  proved 
inavalid.  As  a  result  of  this  discovery,  Capt.  Muller  states, 
the  land  office  has  never  since  readvertised  such  leases  without 
ha\ang  first  secured  the  relinquishment  of  the  unadvertised 
lease  by  the  original  lessee,  thus  placing  all  bidders  upon  ex- 
actly the  same  footing. 

Leases  issued  more  recently  have  been  more  stringent  in 
their  requirements.  A  lease  sold  the  first  part  of  October 
brought  seven  cents  an  acre  for  the  first  year. 

If  the  trust  funds  are  properly  protected  in  the  granting 
of  these  oil  leases  no  one  can  dissent  from  a  policy  which  will 
actually  result  in  bringing  about  real  oil  development  in  New 
Mexico,  but'  Avhat  the  people  demand  is  that  there  shall  be 
no  discrimination  in  the  disposal  of  these  rights  and  that  they 
be  so  disposed  of  as  to  give  the  greatest  possible  results  to 
the  state  and  its  institutions.  Exploration  on  state  lands  will 
not  be  encouraged,  or  the  funds  enriched,  unless  there  is  in- 
augurated in  the  office  a  much  better  conceived  and  more 
business-like  policy  than  has  yet  been  the  case. 

Opportunities' have  no  doubt  all  along  existed,  not  only 
in  connection  with  the  sale  of  oil  leases  but  in  connection  with 
approvals  of  all  kinds,  for  the  employees  in  the  office  to  profit 
through  knowledge  gained  in  the  transaction  of  their  official 
duties.     It  would  be  very  simple  indeed    for  any  one  in  the 


112  REPORT  OF  THE  NEW  MEXICO 

office  to  ask  some  one  outside  to  secure  one  of  the  low-priced 
leases  on  certain  lands,  and  then  through  the  assignment  of 
this  land  at  higher  prices  to  profit  financially.  Whether  or  not 
anything  of  that  kind  has  actually  been  done  we  are  not  pre- 
pared to  say,  and  believe  it  can  only  be  finally  determined  by 
.indicial  inquiry.  Whether  or  not  such  inquiry  should  be 
inaugui-ated  is  for  the  legislature  to  determine. 

Through  a  recent  amendment  of  the  statute  the  state  is 
given  the  right  to  make  oil  leases  not  only  on  unoccupied 
land  but  also  on  land  leased  for  agricultural  or  grazing  pur- 
poses and  on  land  purchased  on  land  contract.  Several  leases 
of  this  kind  were  made  upon  lands  under  contract,  and  as  a 
result  action  Avas  brought  in  court  to  restrain  the  state  from 
making  such  leases.  The  Attorney  General  gave  a  verbal 
opinion  that  the  land  office  had  better  hold  the  rental  paid  on 
oil  leases  on  land  under  contract  and  not  turn  it  over  to  the 
institutions  which  should  properly  benefit  therefrom.  As  a 
result  of  such  verbal  opinion  the  land  office  has  withheld  from 
distribution  moneys  paid  as  such  oil  rentals.  The  money  so 
paid  amounted  on  October  1st  to  $271,610.74.  In  the  M^ant  of  a 
more  conclusive  opinion  than  that  mentioned  above  the  land 
office  could  well  have  assumed  that  this  money  was  state 
money  and  turned  it  over  to  the  institutions.  In  any  case  if 
it  was  not  turned  over,  the  commissioner  should  undoubtedly 
have  secured  interest  from  the  banks  in  which  it  was  deposited, 
but  no  such  request  upon  the  bankers  has  been  made. 

The  approval  of  applications  for  oil,  agricultural  and  graz- 
ing land  and  applications  for  sale  of  lands  is  left  very  largely 
in  the  hands  of  the  particular  employee  who  handles  these  re- 
spective activities.  It  is  wrong  to  place  such  responsibility 
upon  one  man,  not  only  from  his  own  j^oint  of  view  but  because 
the  office  is  not  amply  safeguarded  as  a  result  thereof.  The 
fact  that  the  various  employes  sometimes  confer  with  each 
other  or  the  assistant  commissioner,  does  not  really  alter  the 
situation.  It  should  be  provided  that  these  decisions  should  be 
referred  to  a  commis.sioner  or  some  higher  authority  if  such 
authority  were  substituted  in  lieu  of  the  commissioner.  Mani- 
festly if  this  is  done  this  higher  authority  must  be  such  a  one 
as  is  qualified  to  pass  on  such  questions. 

Analysis  of  Status  of  State  Lands. 

Because  of  the  large  number  of  leases  and  sales,  and  be- 
cause of  the  indefinite  situation  resulting  from  the  fact  that 
the  United  States  liand  Office  has  not  as  yet  approved  many 
selections,  it  is  practically  impossible  to  determine  what  is 
the  present  status  of  state  lands.  Capt.  Muller  states  that 
not  half  of  the  state  lands  have  been  leased  for  oil.     There  is 


SPECIAL  REVENUE  COMMISSION  113 

no  way  of  either  checking  or  disproving  tliis  statement.  It  is 
stated  that  there  are  perhaps  125,000  acres  of  land  which  are 
still  available  for  u^:e  as  base  in  indemnity  or  lieu  selections, 
in  addition  to  the  twenty  sections  claimed  as  mineral  by  the 
United  States  Land  Office,  but  being  contested  by  the  state. 
It  is  also  impossible  to  cheek  or  disprove  this  statements. 

The  land  office  prior  to  the  preparation  of  its  annual  re- 
port will  be  obliged  to  analyze  its  tract  books  to  arrive  at 
figures  for  the  total  area  of  state  lands,  total  lands  clear  listed, 
total  selected  but  not  clear  listed,  lands  sold,  lands  leased  for 
grazing  purposes,  lands  leased  for  agricultural  purposes,  etc. 

The  equipment  of  the  office  is  good,  but  is  cramped  for 
space.  Additional  space  would  be  desirable.  As  to  personnel 
it  is  over-staffed.  Three  or  four  of  the  present  employes 
could  be  advantageously  dispensed  with. 

Maintenance  Fund. 

Sec.  5183,  Revised  Statutes,  provides  that  ''twenty  per 
cent  of  the  income  derived  from  any  state  lands  *  *  *  *  shall 
constitute  a  fund  to  be  knoAvn  as  the  State  Land  Maintenance 
Fund." 

Sec.  5184  provides  that  "all  salaries  and  expenses  of  the 
State  Land  Office  shall  be  paid  from  said  State  Lands  Main- 
tenance Fund.  *  *  *  *  " 

Sec.  5185  provides  that  "any  balance  remaining  in  said 
State  Lands  Maintenance  Fund  *  *  *  *  shall  be  reapportioned 
*****  among  the  several  funds  from  which  derived." 

Paragraphs  one  and  two  of  Section  10,  Enabling  Act, 
however,  provide  in  substance  that  disposition  of  state  lands 
or  any  money  derived  therefrom  for  any  object  other  than 
that  for  which  such  lands  were  granted  or  confirmed,  or  in 
any  manner  contrary  to  the  provisions  of  this  act,  "shall  be 
deemed  a  breach  of  trust." 

The  theory  advanced  by  Mr.  Barker,  Law  Clerk  of  the 
Land  Office,  as  to  Ihe  jegnlity  of  the  use  of  the  Maintenance 
Fund,  as  provided  by  Sees.  5183,  5184  and  5185,  above,  is  that 
the  creation  of  a  trust  also  carries  with  it  the  right  to  pay 
for  the  administration  of  the  trust  from  income  received 
through  its  administration. 

This  may  or  may  not  be  the  legal  view.  In  any  case  it 
would  be  a  great  deal  better  plan  to  require  that  all  income 
received  from  the  administration  of  State  Lands  be  turned 
over  to  the  State  Treasurer  for  the  use  of  the  several  bene- 
ficiaries, as  provided  in  the  Enal)ling  Act ;  and  that  the  salaries 
and  expenses  of  the  land  office  be  appropriated  by  the  General 
Assembly  in  the  appropriation  act. 

Enough  has  been  said,  we  think,  to  confii-m  an  opinion 


114  REPORT  OF  THE  NEW  MEXICO 

that  the  main  difficulty  in  connection  with  the  administration 
of  this  office, — the  fact  which  has,  more  than  any  other,  given 
rise  to  the  conditions  which  have  been  a  source  of  contro- 
versy— is  that  it  has  not  had  a  satisfactory  directing  head.  How- 
ever good  the  technique  of  the  office,  and-  in  most  respects  it 
is  good,  it  is  evident  that  without  competent  direction  and  a 
clear  forceful,  clean-cut  policy  it  cannot  properly  administer 
the  great  trust  imposed  upon  it. 

The  past  two  years  have  been  the  most  important  in  the 
history  of  the  office;  the  next  two  will  in  all  probability  be 
more  important  still.  Many  thousands  of  acres  of  land  have 
been  sold,  millions  have  been  leased  for  grazing,  millions  leased 
for  oil  at  nominal  sums.  Owing  to  careless  selections  in  the 
past  the  present  value  of  the  state  land  endowments  is  no  way 
near  what  it  should  be.  This  is  an  error  that  cannot  be  reme- 
died but  it  accentuates  the  importance  of  making  the  best  pos- 
sible use  and  disposition  of  what  we  have.  The  next  few  years 
will  be  vital  in  the  history  of  the  land  office  especially  if  as 
we  hope  will  be  the  case,  oil  is  discovered  in  the  state. 

It  is,  in  our  opinion,  vital  to  the  tax  payers  and  essential 
to  the  best  interests  of  the  state  that  a  change  in  the  system 
of  supervising  direction  of  this  department  be  brought  about. 

It  has  been  clearly  demonstrated  we  feel,  first,  that  what- 
ever shortcomings  there  may  have  been  in  the  conduct  of  the 
office  in  the  past  have  been  very  largely  due  to  the  lack  of 
competent  direction;  and  second,  that  the  dangers  of  recur- 
rence or  continuance  of  any  bad  conditions  in  the  future  will 
not  be  eliminated  unless  some  way  is  provided  for  securing 
a  really  efficient  and  constantly  vigilant  overseeing  director- 
ship. It  seems  that  this  cannot  be  accomplished  under  the 
established  system.  Our  suggesetion  as  to  how  it  can  be 
accomplished  will  appear  later  in  this  report. 

State  Colleg-es  and  Schools. 

In  addition  to  the  thirteen  State  and  Educational  Institu- 
tions listed  on  page  101  of  this  report,  are  the  State-  Museum 
and  the  Child  Welfare  Home  at  Santa  Fe,  and  the  Girls'  Wel- 
fare Home  at  Albuquerque.  There  is  some  comment  on  the 
Child  Welfare  Board  in  our  remarks  on  the  State  Board  of 
Health. 

Grants  of  land  were  made  by  the  Ferguson  Act  in  1898  by 
Section  7  of  the  Enabling  Act  for  the  support  of  such  schools 
but  those  grants  did  not  in  themselves  specify  their  location. 

Section  7  of  the  Enabling  Act  reads  in  part  as  follows: 

"  *  *  *  the  following  grants  of  land  are  hereby  made, 
to-wit : 

For   university   purposes,    two   hunderd   thousand   acres; 


SPECIAL  REVENUE  COMMISSION  115 

*  *  *  for  normal  schools,  two  hundred,  thousand  acres ;  *  *  *  for 
agricultural  and  mechanical  colleges,  one  hundred  and  fifty 
housand  acres;  *  *  *  for  school  of  mines,  one  hundred  and 
fifty  thousand  acres ;  *  *  *  for  military  institutes,  one  hundred 
thousand  acres." 

The  seven  educational  institutions  above  listed,  as  well  as 
the  Deaf  and  Dumb  and  the  Blind  asylums  at  Santa  Fe  and 
Alamogordo,  respectively,  were  already  established  in  their 
present  locations  w^hen  New  Mexico  was  admitted  to  statehood 
and  were  confirmed  as  "state  educational  institutions"  by 
Section  11  of  Article  XII  of  the  Constitution  in  the  following 
terms : 

"Sec.  11.  The  University  of  New  Mexico  at  A]l)u- 
querque,  the  New  Mexico  College  of  Agriculture  and  Me- 
chanic Arts  near  Las  Crnces,  the  New  Mexico  School 
of  Mines  at  Socorro,  the  New  Mexico  Military  Institute  at 
Roswell,  the  New  Mexico  Normal  University  at  Las  Vegas, 
the  New  Mexico  Normal  School  at  Silver  City,  the  Spanish 
American  School  at  El  Rito,  the  New  Mexico  Asylum 
for  the  Deaf  and  Dumb  at  Santa  Fe,  and  the  New  Mexico 
Institute  for  the  Blind  at  Alamogordo,  are  hereby  con- 
firmed as  state  educational  institutions.  The  appropria- 
tions made  and  that  may  hereafter  be  made  to  the  state 
by  the  LTnited  States  for  agricultural  and  mechanical  col- 
leges and  cxpeiiment  stations  in  connection  thereAvith, 
shall  be  paid  to  the  New  Mexico  College  of  Agriculture 
and  Mechanic  .'\ris." 

Sections  12  and  13  relating  to  the  same  matter  are  as 
follows: 


aa. 


Sec.  12.  All  lands  granted  under  the  provision  of 
the  act  of  Congress  entitled  "An  Act  to  enable  the  people 
of  New  Mexico  to  fom  a  constitution  and  state  government 
and  be  admirted  into  the  Union  on  an  equal  footing  with 
the  original  states;  and  to  enable  the  people  of  Arizona  to 
form  a  constitution  and  state  government  and  be  admitted 
into  the  Union  on  an  equal  footing  with  the  original 
states."  for  the  purposes  of  said  several  institutions  are 
hereby  accepted  and  confirmed  to  said  institutions,  and 
shall  be  exclusively  used  for  the  purposes  for  which  they 
were  granted;  provided,  that  one  hundred  and  seventy 
thousand  acres  of  the  land  granted  by  said  act  for  normal 
school  purposes  are  hereby  equally  apportioned  between 
the  three  normal  institutions  and  the  remaining  thirty 
thousand  acres  thereof  is  reserved  for  a  normal   school 


116  REPORT  OF  THE  NEW  MEXICO 

which  shall  be  established  by  the  legislature  and  located  in 
one  of  the  counties  of  Union,  Quay,  Curry,  Roosevelt, 
Chaves  or  Eddy." 

"Section  13.  The  legislature  shall  provided  for  the 
control  and  numagement  of  each  of  said  institutions  by  a 
board  of  regents  for  each  institution,  consisting  of  five 
members  to  be  appointed  by  the  governor,  by  and  with  the 
advice  and  consent  of  the  senate,  for  a  term  of  four  years, 
and  not  more  than  three  of  whom  shall  belong  to  the  same 
political  party  at  the  time  of  their  appointment.  The 
duties  of  said  boards  shall  be  prescribed  by  law." 

At  the  Constitutional  Convention  there  was,  we  are  in- 
formed, some  discussion  as  to  the  advisability  of  confirming 
these  institutions  by  constitutional  enactment  to  any  particular 
localities.  By  so  doing  any  efective  change  in  the  organiza- 
tion of  our  state  higher  educational  system  is  out  of  the  ques- 
tion without  constitutional  amendment. 

As  preliminary  to  legislation  looking  towards  any  re- 
organization, centralization  or  consolidation  of  any  of  these 
inslitutions,  or  towards  any  change  in  their  methods  of  control 
and  management,  these  sections  of  the  Constitution  must  be 
amended. 

As  it  now  stands  there  is  no  flexibility — there  is  little 
chance  of  improved  conditions  if,  through  scattered  efforts 
and  limited  means,  efficiency  proves  impossible  of  attainment 
under  the  existing  system. 

That  the  present  system — or  lack  of  system — has  in  many 
respects  proven  to  be  ineffective  and  unsatisfactory  from  an 
educational  standpoint,  has  been  already  fully  demonstrated. 

That  it  is  extravagant  and  wasteful  from  an  economic 
standpoint  is  equally  true.  The  people^ — who  pay  the  bills — 
are  not  getting  their  money's  worth— and  from  this  angle  the 
problem  cannot  be  passed  over  by  this  Commission. 

It  is  stated  that  the  Revenue  Commission  and  the  Taxpay- 
ers' Association  can  look  at  none  of  these  problems  except 
from  the  standpoint  of  money  cost — that  we  have  no  vision — 
are  narrow  and  sordid  in  our  point  of  view.  It  is  true  that  the 
main  task  of  the  Revenue  Commission  is  to  try  to  find  ways  for 
equitably  distributing  the  tax  burden,  to  bring  about  efficient 
administration,  to  find  methods  of  raising  money  to  pay  the 
bills,  but  this  does  not  imply  that  we  are  either  bigoted  or  un- 
sympathetic in  our  attitude  towards  education. 

On  the  contrary,  we  are  fully  convinced  that  an  effective 
re-organization  and  consolidation  of  some  of  these  institutions 
would  not  only  result  in  lessening  their  cost  to  the  taxpayers 
but  in  greatly  increasing  their  efficiency  as  educational  estab- 


SPECIAL  REVENUE  COMMISSION  117 

lishments.  There  is  no  doubt  about  this.  No  one  who  has  given 
the  question  any  thought  can  honestly  deny  it.  No  one  quali- 
fied to  pass  upon  the  matter,  whether  he  considers  it  from  an 
academic  of  an  economic  standpoint  can  honestly  say  that, 
considering  New  Mexico's  present  and  prospective  resources, 
the  three  institutions  in  the  Rio  Grande  Valley  can  ever  sepa- 
rately become  really  efficient  as  a  university,  a  school  of  mines 
and  an  agricultural  college.  No  one  believes  that  they  can 
ever,  under  the  present  system,  attain  the  standard  or  come 
any^vhere  near  attaining  the  standard  set  for  institutions  of 
higher  education  going  under  the  names  attached  to  them. 

If,  in  the  final  analysis,  the  considerations  which  are  to 
determine  the  permanent  status  of  any  or  all  of  these  institu- 
tions, are  merely  considerations  of  local  jealousies  and  sec- 
tional pride — if  there  are,  after  a  careful  canvass  of  the  situa- 
tion, found  to  be  enough  people  in  the  state' who  feel  that  all 
of  these  institutions  should  be  maintained  indefinitely  in  their 
present  unsatisfactory  condition,  because  they  are  already 
located  in  certain  places,  then,  of  course,  there  is  no  reason  for 
securing  constitutional  amendments  with  a  view  of  bringing 
about  consolidation  or  even  re-organization  in  any  respect 
whatever. 

However,  we  do  not  believe  that  such  is  the  situation.  We 
do  not  believe  that  the  people  of  the  state  as  a  whole  are  satis- 
fied to  let  the  matter  rest  in  its  present  status.  We  think  they 
should  be  given  a  chance  to  express  themselves  on  the  question 
and  that  the  right  way  to  bring  the  matter  fully  and  intelli- 
gently before  the  voters  for  debate  and  discussion  is  by  the 
submission  of  a  constitutional  amendment,  so  changing  the 
articles  of  the  Constitution  above  referred  to  as  to  subsequent- 
ly permit  of  such  changes  as  may  be  thought  desirable  by  the 
legislature  or  demanded  by  the  taxpayers. 

This  is  not  the  place  nor  the  occasion  to  go  fully  or  in 
great  detail  into  the  statistics  of  cost,  maintenance  and  ad- 
ministration of  these  various  institutions.  The  question  is 
only  one  of  many  your  Commission  has  had  to  consider.  In  the 
appendix  to  this  report,  however,  appear  certain  tables  in  re- 
gard to  the  receipts,  expenditures,  appropriations,  unit  cost  of 
maintenance,  enrollment  and  other  data  to  which  we  earnestly 
invite  your  attention.  The  seven  institutions  naturally  divide 
themselves  into  three  groups: 

I.     The  University. 

The  Agricultural   College. 
The  School  of  Mines. 


118  REPORT  OF  THE  NEW  MEXICO 

11.     The  Las  Vegas  Normal. 
The  Silver  City  Normal. 
The  El  Kito  Normal. 
ill.     The  jMilitary  Institute. 

One  table  shows  the  receipts  and  expenditures  of  these  in- 
stitutions separately  and  by  groups.  Other  tables  demonstrate 
very  clearly  on  their  face,  especially  in  connection  with  the 
first  group,  the  high  per  capita  cost,  the  almost  hopeless  situa- 
tion arising  because  of  duplication  in  scattered  schools  of  small 
departments  and  the  great  waste  in  overhead. 

Possibilities  for  consolidation,  it  is  believed  by  the  Com- 
mission, are  found  among  the  educational  institutions  whereby 
the  number  of  such  institutions  may  be  reduced  from  seven  to 
four  with  a  lessening  of  expense  of  maintenance  and  an  in- 
crease in  efficiency.  The  adjustments  recommended  involve, 
(1)  the  consolidation  of  the  University,  the  College  of  Agricul- 
ture and  Mechanic  Arts  and  the  School  of  Mines,  and  (2)  the 
transfer  of  the  functions  of  the  Spanish  American  Normal 
School  to  the  Normal  University  at  Las  Vegas.  As  to  whether 
there  should  be  further  consolidation  of  the  Normal  Schools 
should  bo  a  subject  of  careful  investigation. 
I.  The  University,  the  College  of  Agriculture  and  Mechanic 
Arts  and  the  School  of  Mines. 

The  University  of  New  Mexico  located  at  Albuquerque, 
the  New  Mexico  Colleg  of  Agriculture,  located  at  State  College 
two  and  a  half  miles  from  Las  Cruces,  and  the  New  Mexico 
School  of  Mines  located  at  Socorro,  constitute  the  higher  edu- 
cation system  of  New  Mexico.  These  institutions  were  created 
by  acts  of  the  territorial  legislature  in  1889  and  were  confirmed 
as  state  educational  institutions  by  the  state  constitution  adopt- 
ed in  1910.  Situated  in  the  Rio  Grande  Valley,  upon  the  line 
of  the  Santa  Fe  railway  syst_em,  the  School  of  Mines  is  about 
seventy  miles  south  of  Albuquerque,  and  the  College  of  Agri- 
culture and  Mechanic  Arts  approximately  125  miles  south  of 
the  School  of  IMines. 

Property  of  the  Three  Institutions. 

According  to  an  investigation  made  by  the  Taxpayers' 
Association  of  New  Mexico  in  1916,  the  value  of  the  fixed  prop- 
erty at  the  three  institutions  was  as  follows: 

University  $211,326.59 

College  of  Agriculture  380,640.67 

School  of  Mines 135,249.99 


$727,217.25 

A  later  study  made  by  the  Traveling  Auditor  shows  prop- 
ertv  values  as  of  1919  : 


SPECIAL  REVENUE  COMMISSION  119 

Furniture, 

Fixtures,  Other 

Building  Equlpmont  Realty  Total 

University  $275,000.00  $  66,981.76  $40,000.00  $381,981.76 
Ag.  College  385,810.00  237,238.00  38,950.00  661,998.00 
School  Mines    114,000.00         35,421.66         5,000.00       154,421.66 

Total  $774,810.00     $339,641.42     $83,950.00  $1,198,401.42 

If  the  lands  granted  by  the  Federal  Government  in  1898 
and  in  1910  be  taken  into  consideration  and  valued  at  $4.00 
per  acre,  additional  assets  would  appear  as  follows: 

The  University  311,080  acres  $1,344,320.00 

The  Ag.  College  250,000  acres  $1,000,000.00 

School  of  Mines  _ 200,000  acres  $    800,000.00 

The  University  has  also  certain  saline  lands  valued  rough- 
ly at  $100,000.00. 

Students. 

The  University  enrollment  for  the  last  year  Avas  284,  that 
of  the  School  of  Mines  was  90  and  the  College  of  Agriculture 
and  Mechanic  Arts  487.  Of  the  total  of  861,  499  are  listed  as 
of  college  grade,  284  at  the  University,  142  at  the  College  of 
Agriculture  and  73  at  the  School  of  IMines. 

A  close  study  made  in  the  fall  of  1916  showed  203  college 
students  at  the  University,  93  at  the  College  and  32  at  the 
School  of  Mines,  a  total  of  328.  In  the  four  years  there  has 
therefore  been  an  increase  in  the  number  of  college  students 
of  about  40  per  cent  in  the  three  institutions. 

Besides  college  students  there  were  some  irregular  stu- 
dents of  sub-college  grade  at  the  University,  357  of  secondary 
preparatory  school  grade  at  the  college  and  17  at  the  School  of 
Mines.  The  University  had  also  119  persons  registered  for 
lecture  courses  given  by  members  of  the  facutly  of  the  insti- 
tution. 

Distribtution  of  Students. 

In  the  study  of  1916  it  was  found  that  sudents  from 
the  county  in  which  the  institution  is  located  constituted  53 
per  cent  of  the  enrollment  at  the  University,  46  pei-  cent  at 
the  College  and  17  per  cent  at  the  School  of  Mines.  For  the 
last  year  such  students  were  about  fifty  per  cent  of  the  conroll- 
ment  at  the  University,  25  per  cent  at  the  College  and  40  per 
cent  at  the  School  of  Mines. 

In  1916  students  from  other  counties  in  New  Mexico  con- 
stituted 35  per  cent  of  the  enrollment  a1    1lio  University,  33 


120  REPORT  OF  THE  NEW  MEXICO 

per  cent  at  the  College  and  30  per  cent  at  the  School  of  Mines. 
In  1920  the  per  cents  Avere  respectively  32,  50,  11.  Students 
from  outside  Ncav  Mexico  in  1916  were  12  per  cent  of  the  en- 
rollment at  the  University,  21  per  cent  at  the  College  and  53 
per  cent  at  the  School  of  Mines.  In  1920  the  corresponding 
per  cents  were  18,  25  and  49. 

Unit  Cost  of  Maintenance. 

The  gross  cost  of  maintenance  per  student  at  the  Univer- 
sity in  1916  was  $440.00;  at  the  College  $509.00  and  at  the 
School  of  IVIines  $1100.  In  1920  the  gross  cost  of  maintenance 
was  $430.00  at  the  University,  $536.00  at  the  College  and  $610. 
at  the  School  of  Mines.  The  estimates  for  the  Agricultural 
College  do  not  include  expenditures  for  Extension  and  Ex- 
periment Station  purposes. 

Courses  of  Study. 

The  number  of  courses  listed  at  the  University  for  1920 
was  268,  practically  all  of  college  grade.  At  the  College  of 
Agriculture  and  Mechanic  Arts  288  courses  were  offered  in- 
cluding full  sets  of  courses  in  secondary  school  subjects.  At 
the  School  of  Mines  175  courses  were  offered.  In  all  three  in- 
stitutions similar  courses  are  offered  in  mathematics,  physics, 
chemistry,  the  various  branches  of  engineering,  and  to  a  certain 
extent  in  English  and  Spanish.  Many  other  courses  are  dupli- 
cated at  the  University  and  the  College. 

Enrollment  and  Attendance. 

As  to  the  enrollment  in  the  various  courses,  the  1916 
figures  revealed  that  216  courses  were  given  at  the  University, 
45  per  cent  of  which  had  five  or  fewer  students  enrolled,  29 
had  from  6  to  10  students  and  26  per  cent  had  more  than  10 
students.  At  the  College  206  courses  were  given  of  which  47 
per  cent  had  five  or  fewer  students  enrolled,  23  per  cent  had 
from  6  to  10,  and  30  per  cent  had  11  or  more.  At  the  School 
of  Mines  66  courses  were  given,  of  which  53  per  cent  had  five 
or  fewer  students,  41  per  cent  had  from  6  to  10  students,  and 
only  6  per  cent  had  more  than  10.  For  1920  figures  are  not 
yet  available  for  the  University  and  the  School  of  Mines.  The 
College  of  Agriculture  reports  177  courses  given  of  which  56 
or  32  per  cent  enrolled  five  or  fewer  stdutnes;  32  courses,  or 
12  per  cent  enrolled  from  6  to  10;  89,  or  56  per  cent,  enrolled 
11  or  over.  In  1916  the  average  number  of  students  attend- 
ing each  class  was  8.8  at  the  University,  10.8  at  the  College 
mid  5  3  nt  the  Sr-hool  of  Mines.  The  average  number  of  periods 
taught  by  each  instructor  per  week  was  19  at  the  University, 


SPECIAL  REVENUE  COMMISSION  121 

18.5  at  the  College  and  25  at  the  School  of  Mines.  The  unit 
cost  of  instruction  per  student  per  class  period  was  27  cents 
at  the  University,  21  cents  at  the  College  and  38  cents  at 
the  School  of  Mines.  Because  of  the  lack  of  inforation  for 
1920,  corresponding  figures  cannot  be  submitted  for  that  year, 
but  it  is  probable  that  somewhat  better  attendance  and  conse- 
quently a  little  lower  instruction  cost  prevailed. 

Recommendations  as  to  Consolidation. 

In  view  of  the  facts  and  figures  above  given,  the  Com- 
mission finds  no  sufficient  justification  for  the  state's  mani- 
taining  three  institutions  of  higher  learning.  By  combining 
them,  an  institution  of  respectable  proportions  can  be  bulit 
up  with  a  competent  corps  of  instructors  and  a  body  of  enthu- 
siastic students.  The  overhead  expense  can  be  greatly  reduced. 
The  amount  required  for  salaries  may  be  as  much  as  a  third 
less  than  at  present  and  still  provide  amply  for  sufficient  in- 
structors and  adequate  salaries.  Duplication  will  of  course  be 
eliminated  as  well  also  the  duplication  of  buildings  and  equip- 
ment. It  the  consolidated  school  shall  be  placed  at  a  central 
point  there  will  be  a  material  saving  in  traveling  expenses 
both  for  students  and  for  the  institution.  The  maintenance 
cost  of  one  institution  will  be  much  less  than  for  three.  So 
long  as  there  are  three  schools  such  appropriations  will  be  made 
reluctantly  and  only  to  meet  emergencies.  There  is  a  general 
feeling  throughout  the  state  that  consolidation  should  be  ef- 
fected and  this  gives  rise  to  a  feeling  on  the  part  of  legislators 
that  present  conditions  are  not  permanent ;  hence  their  un- 
willingness to  make  further  permanent  investments  in  these 
institutions. 

The  objection  may  be  urged  that  the  state  has  already 
invested  heavily  in  land,  buildings  and  equipment  at  these  in- 
stitutions. In  the  event  of  consolidation  it  is  not  believed  that 
material  loss  would  result.  Equipment  can  be  moved,  land 
can  be  sold,  and  even  buildings  may  be  disposed  of  without 
great  sacrifice.  Whatever  loss  there  may  be  will  be  more  than 
offset  by  the  savings  in  maintenance  cose  through  the  years 
of  the  institution's  life. 

II.    The  Spanish  American  Normal  School. 

This  institution  is  situated  in  a  remote  village  25  miles 
from  a  railroad  station.  Its  function  is  to  train  teachers  for 
their  work  in  Spanish-x\merican  communities.  In  1916  thei-e 
were  81  pupils  enrolled,  of  whom  72  were  residents  of  the 
county  in  which  the  institution  is  located;  77  of  the  total  of  81 
were  of  elementary  grade  and  only  four  of  high  school  grade. 
In  the  past  school  year  a  larger  proportion  of  the  pupils  were 


122  REPORT  OF  THE  OEW  MEXICO 

of  high  school  grade  and  the  representation  iroui  other  coun- 
ties Avas  larger.  Exact  figures  are  being  secured  for  compara- 
tive pui-poses.  The  institution  was  estal)lishcd  in  1909,  and  has 
not  yet  after  a  decade  given  conclusive  evidence  of  realizing 
the  hopes  of  its  sponsors.  Several  principals,  some  of  them 
very  capable,  have  been  unable  to  attract  and  hold  students 
in  the  institution.  It  would  seem,  therefore,  that  the  functions 
of  the  Spanish  American  Normal  School,  insofar  as  they  per- 
tain to  the  training  of  teachers,  should  be  transferred  to  the 
Normal  University  at  Las  Vegas.  Better  still  let  the  Norma? 
University  at  Las  Vegas  and  the  Normal  School  at  Silver  City 
open  departments  for  training  teachers  for  rural  schools  Avith 
special  courses  for  the  benefit  of  those  who  are  to  teach  in 
Spanish-American  communities. 

III.     Courses  in  The  Normal  Schools. 

It  is  recognized  that  normal  schools  have  to  maintain 
high  school  departments  so  as  to  afford  opportunities  for  teach- 
ers to  secure  academic  training  at  the  same  time  that  they  are 
pursuing  their  professional  courses.  It  is  also  necessary  for 
such  institutions  to  maintain  an  elementary  school  in  charge 
of  critic  teachers  in  which  students  may  observe  methods  and 
find  opportunities  for  actual  teaching  under  supervision. 

The  function  of  state  normal  schools  is  held  to  be  the 
training  of  teachers  for  rural  and  elementary  schools.  For  this 
purpose  it  is  felt  that  provision  should  be  made  for  two  years 
of  training  in  addition  to  the  usual  four  years  of  high  school. 
It  is  not  believed  that  the  third  and  folirth  years  of  college 
work  are  a  necessary  part  of  the  Normal  School  functions. 
Should  advanced  work  be  desired,  or  if  the  teacher  is  prepar- 
ing for  work  in  high  schools,  she  should  attend  the  University 
where  courses  suited  to  her  needs  will  be  found  in  the  depart- 
ment of  education. 

By  restricting  the  function  of  normal  schools  as  indicated, 
it  may  be  found  possible  for  these  instutions  to  meet  the  great 
need  that  now  exists  in  the  state — that  of  trained  teachers  in 
our  rural  schools.  Every  inducement  should  be  exerted  to  the 
end  that  in  the  course  of  ten  years  every  teacher  in  the  state 
should  have  a  normal  training.  Until  this  is  brought  about 
these  institutions  should  not  expand  the  scope  of  their  work 
to  include  the  two  upper  college  years. 

A  similar  recommendation  is  made  as  to  the  New  Mexico 
Military  Institute.  No  effort  should  be  made  by  that  institu- 
tion to  expand  its  courses  beyond  the  second  year  above  the 
accepted  high  school  or  preparatory  school  curriculum.  The 
two  upper  years  of  college  course  should  be  concentrated  at 
the  University. 


SPECIAL  REVENUE  COMMISSION  123 

Your  Commission  is  fully  alive  to  the  difficulties  of  bring- 
ing about  any  changes  in  the  present  organization  of  the  schools 
and  fully  aware  that  the  subject  should  be  approached  with 
great  care  and  given  the  fullest  consideration.  The  Taxpayers' 
Association  of  New  Mexico  has  secured  the  aid  of  three  very 
highly  qualified  educators,  who  are  devoting  their  lives  to 
these  very  problems,  to  make  a  preliminary  survey  of  our 
particular  situation.  One  of  these  gentlemen  has  already  made 
a  preliminary  reconnoissance  of  the  situation  and  visited  most 
of  the  institutions.  It  is  a  pleasure  to  testify  that  he  was  re- 
ceived most  cordially  and  proffered  the  hearty  co-operation  of 
the  heads  of  all  the  institutions  he  visited,  and  that  he  found 
much  to  commend  in  many  of  them.  These  inquiries  will  be 
continued  by  the  Taxpayers'  Association  and  throUgh  them 
your  Commission  hopes  to  have  before  the  meeting  of  the  legis- 
lature further  data  which  will  bear  directly  and  intelligently 
on  the  problem  as  a  whole. 

We  recommend  to  the  legislature  the  passage  of  a  Joint 
Resolution  for  the  submission  to  the  voters  of  the  state  of  the 
following  amendment  to  the  Constitution : 

"JOINT  RESOLUTION  No 


Proposing  Amendments  to  Article  V  and  Article  XII  of  the 
Constitution  of  the  State  of  New  Mexico. 

Be  It  Resolved  by  the  Legislature  of  the  State  of  New 
Mexico : 

Section  1.  That  Section  1  of  Article  V  be  amended 
by  striking  out  therefrom  the  Avords  "Commissioner  of 
Public  Lands." 

Section  2.  That  Article  XII  be  amended  by  adding 
thereto  the  following : 

Section  14.  The  state  educational  institutions  men- 
tioned in  Section  11  of  Article  XII  may  hereafter  be 
merged,  consolidated,  re-organized  and  re-located  by  the 
legislature  which  may,  by  law,  provide  for  the  control  and 
management  of  all  educational  institutions  by  a  single 
board  of  five  regents  to  be  appointed  by  the  governor  by 
and  with  the  advice  and  consent  of  the  senate,  not  more 
than  three  of  whom  shall  belong  to  the  same  political  party 
and  whose  terms  of  office  may  be  fixed  by  the  legislature 
to  terminate  at  different  times,  provided  that  no  term  of 
any  member  of  such  board  of  regents  sliall  exceed  six 
years  but  all  members  of  such  board  of  i-egents  shall  be 
eligible  to  reappointment. 


121  RP:P0RT  of  the  new  MEXICO 

Section  15.  Tlic  lo<>islHture  may  abolish  the  office  of 
Coiumissionev  of  Public  Lauds  aud  may  provide  that  all 
powers  and  duties  now  by  law  pertaining  to  the  office  of 
Connnissioner  of  Public  Lands  shall  be  performed  by  the 
P>c)ard  of  Regents  of  the  State  Educational  Institutions 
herein  provided  for;  the  legislature  shall  also  have  power 
to  amend,  repeal  or  modify  in  such  manner  as  to  them  may 
seem  desirable  all  laws  relating  to  the  public  lands;  pro- 
vided, however,  that  all  such  amendments,  repeals  or  modi- 
fications shall  be  in  accord  wdth  the  legislation  of  Con- 
gress granting  the  said  lands ;  and  provided  further,  that 
none  of  the  educational  institutions  herein  mentioned  shall 
be  abolished  by  the  legislature  without  the  consent  of  the 
Congress  of  the  United  States." 

The  proposed  amendment  to  Section  1  of  Article  V  is  in- 
tended merely  to  deprive  the  office  of  Land  Commissioner  of 
its  status  as  a  part  of  the  constitutional  executive  department 
of  the  government,  and  it  is  an  essential  part  of  the  scheme  to 
vest  the  legislature  wdth  power  to  carry  out  the  recommenda- 
tions of  the  commission  without  devolving  upon  them  the  duty 
to  do  so.  It  may  be  accepted  as  a  demonstrated  fact  from  the 
data  presented  with  the  report  that  a  single  board  of  regents 
for  all  of  the  educational  institutions  of  the  state  without  de- 
parture from  the  present  method  of  administration  of  those  in- 
.stitutions  would  result  in  a  large  saving  to  the  taxpayers  be- 
cause of  the  fact  that  such  a  board  Avould  view  the  needs  of 
the  various  educational  institutions  from  the  standpoint  of 
the  power  of  the  state  to  provide,  and  the  relative  importance 
of  the  necessities  of  the  various  institutions,  whereas,  under 
the  present  system  of  separate  boards  a  struggle  and  rivalry 
between  the  various  institutions,  each  getting  the  largest  pos- 
sible appropriation,  is  constantly  exercising  a  pressure  upon 
the  members  of  the  legislature  against  the  wise  and  economical 
distribution  of  the  available  resources,  an  excessive  appropria- 
tion in  favor  of  any  one  of  the  institutions  being  used  as  a 
lever  to  increase  the  appropriations  of  all  the  others  and  a 
necessary  appropriation  for  one  is  frequently  urged  as  the  basis 
of  an  unnecessary  appropriation  for  another. 

The  (youimission  is  justified  in  recommending  this  amend- 
ment sokly  upon  ihe  ground  of  the  increased  efficiency  and 
economy  of  administration  which  would  necessarily  flow  from 
the  adoption  of  this  method  whether  any  change  was  ever  here- 
after made  in  the  location  of  the  institution  or  in  the  consolida- 
tion of  any  two  or  more  of  them. 

It  is  obvious,  however,  that  in  submitting  an  amendment 
to  the  constitution  which  Avill  enable  the  legislature  to  adopt 


SPECIAL  REVENUE  COMMISSION  125 

any  or  all  of  the  recommendations  of  the  commission,  the 
amendment  should  be  broad  enough  to  meet  the  exigencies 
which  may  arise  as  to  the  result  of  the  first  experiment ;  for 
instance,  if  a  single  board  of  regents  produced  the  good  re- 
sults which  the  commission  believed  it  would  produce,  it  would 
doubtless  appear  to  be  the  part  of  wisdom  to  enlarge  the  scope 
of  the  powers  of  this  board  of  regents  and  to  invest  them  with 
full  authority  over  the  lands  granted  by  congress  for  the  sup- 
port and  maintenance  of  these  institutions.  A  board  of  regents 
Avhich  stood  in  the  relation  of  actual  trustees  for  the  institu- 
tional beneficiaries  of  the  bounty  of  congress,  might  well  be 
expected  to  approach  the  duty  of  administering  public  lands 
with  a  much  more  serious  sense  of  the  importance  of  that  duty 
than  could  be  expected  to  influence  a  commission  of  public 
lands  nominated  as  a  reward  for  partisan  political  services 
and  elected  in  part,  at  least,  by  the  influence  and  votes  of  per- 
sons expecting  and  desiring  favors  from  the  land  office. 

A  board  of  regents  charged  with  the  management  of  the 
educational  institutions  and  the  administration  of  public  lands 
would  render  such  service  to  the  state  as  would  justify  the  state 
in  securing  a  board  of  high  class  men  who  should  devote  their 
entire  time  to  this  very  important  branch  of  the  state's  admin- 
istration, each  member  of  which  board  might  well  be  paid  ade- 
quate compensation  for  his  services  to  the  state.  It  is  believed 
that  such  a  board  so  selected  and  paid  will  not  only  result  in 
present  pecuniary  economy  in  administration  but  would  be  of 
incalculable  benefit  in  the  preservation  and  conservation  of 
the  landed  resources  of  these  educational  institutions. 

Should  oil  be  found  upon  any  of  these  lands  the  impor- 
tance, nay,  the  necessity,  of  some  such  scheme  as  is  here  out- 
lined would  become  immediately  obvious.  Again,  a  single 
board  of  regents  managing  the  educational  institutions  and 
administering  the  public  lands  might  very  well  produce  such 
results  in  the  way  of  economy  and  efficiency  of  administration 
as  would  incline  the  taxpayers  and  the  people  of  this  state  to 
accept  the  opinion  of  that  body  as  to  the  Avisdom  of  further 
changes  in  methods  of  administration,  or  might  even  compel 
the  conclusion  that  any  suggestion  deliberately  made  by  such 
board  of  regents  would  be  entitled  to  be  fully  tried  out  by 
such  legislative  means  as  might  be  adequate  to  a  complete 
adoption  of  any  suggestion  of  the  board  of  regents.  In  the 
event  that  the  board  of  regents  thought  it  Avise  to  consolidate 
two  or  more  of  these  educational  institutions  or  to  change  the 
location  of  any  one  of  them,  it  seems  to  this  commission  that 
any  constitutional  obstacle  to  such  an  accomplishment  should 
not  be  permitted  to  remain.  Indeed  Ave  urge  not  that  the  con- 
stitution be  amended  so  as  to  require  the  legislature  to  do  any 


126  REPORT  OF  THE  NEW  MEXICO 

of  the  things  rcconmiendod  or  suggested  by  tlie  Commission,  we 
do  urge  that  every  constitutional  obstacle  to  the  doing  of  such 
of  those  things  as  may  commend  themselves  to  the  wisdom  of 
the  people's  representatives  shall  be  removed  and  to  that  end, 
and  to  that  end  only,  we  submit  tliis  constitutional  amend- 
ment. 

In  order  to  bring  about  an  adequate  adjustment  of  the 
administration  of  the  land  office  and  the  state  institutions, 
educational  and  otherAvise,  your  Commission  presents  the  fol- 
lowing program  for  youi-  consideration  : 

1.  The  consolidation  of  the  University,  the  Agricultural 
College  and  the  School  of  Mines  into  one  institution,  to 
be  called  the  University  of  New  Mexico. 

2.  The  consolidation  of  the  three  Normal  Schools  into  one 
or  two  Normal  Schools,  as  may  be  found  advisable. 

3.  The  creation  of  a  new  board  to  be  called  the  Institu- 
tional and  Land  Board,  which  shall  have  control  of 
the  present  educational  institutions  as  now  consti- 
tuted or  as  they  may  be  constituted  on  consolidation, 
and  of  the  Deaf  and  Dumb,  and  Blind  schools,  and 
the  Miners'  Hospital — and  the  abolition  of  the  pres- 
ent separate  boards  for  these  institutions.  This  board 
also  to  have  the  control  and  management  of  all  the 
state  lands — and  the  State  Land  Office  in  lieu  of  a 
Commissioner  of  Public  Lands. 

4.  The  abolition  of  the  office  of  Commissioner  of  Public 
Lands. 

5.  The  creation  of  a  new  board  to  be  known  as  the  Penal 
and  Reform  Board,  which  shall  have  control  of  the 
Penitentiary,  the  Reform  School  and  the  Insane  Asy- 
lum and  the  discontinuance  of  separate  boards  for  these 
institutions. 

As  the  necessary  or  preliminary  step  toward  the  consid- 
eration of  all  or  part  of  such  a  program,  we  recommend  the  im- 
mediate passage  of  the  amendments  to  the  constitution  above 
specified. 

As  a  matter  of  interest  to  the  legislature  there  is  included 
in  the  appendix  to  this  report  a  letter  from  H.  F.  Stephens, 
Auditor  of  the  Taxpayers'  Association,  to  the  President  of  the 
Association,  giving  a  summary  of  a  report  on  the  State  Agri- 
cultural College.  This  report  was  made  by  the  State  Traveling 
Auditor  Vv^ith  the  assistance  of  the  Taxpayers'  Association  upon 
the  request  of  the  Govenor. 

The  Agricultural  College  has  been  the  subject  of  much 
controversy  throughout  the  state  and  this  summary  will  serve 


SPECIAL  REVENUE  COMMISSION  127 

to  clarify  the  situation.  It  vividly  demonstrates  how  difficult 
it  is  for  any  of  these  institutions,  under  the  present  system, 
to  stay  within  their  authorized  income  and  is  an  additional 
proof,  if  any  were  necessary,  of  the  certain  advantages  that 
would  follow  consolidation. 

(Note :     See  Appendices  X,  XVIII,  XX,  XL,  XLI.) 


CHAPTER  yii. 

THE  ASSESSMENT  OF  VARIOUS  SPECIFIED 
CLASSES  OF  PROPERTY. 

Page 

Railroads 129 

Gasoline  Tax  _ ,...131 

State  Franchise  Tax  ....'. 133 

Private  car  companies  133 

Express  companies  134 

Assessments  of  banks ....134 

Automobiles  135 

Public  utilities  135 


SPECIAL  REVENUE  COMMISSION  129 

CHAPTER  VII. 

THE  ASSESSMENT  OF  VARIOUS  SPECIFIED 
CLASSES  OF  PROPERTY. 

It  may  be  generally  stated  that  the  railroads  as  a  whole 
in  New  Mexico  are  at  present  adequately  assessed,  and  there 
are  few  who  will  attempt  to  deny  such  statement.  Whatever 
may  have  been  the  practice  and  methods  of  railroad  assess- 
ments in  the  past,  the  practice  which  has  grown  up  in  recent 
years  is  .such  as  to  convince  practically  every  one  who  has 
given  the  matter  any  attention  that  the  railroads  as  a  whole 
are  now  paying  their  full  share  of  taxes.  (See  statement  in  ap- 
uendices  XII  and  XIII. 

The  State  Tax  Commission  under  the  law  has  the  duty  of 
assessing  railroads,  but  there  are  no  specific  provisions  in  the 
law  as  to  the  precise  methods  to  be  used  in  arriving  at  such 
valuations. 

In  the  deliberations  held  between  the  railroads  and  the 
Tax  Commission  prior  to  the  annual  assessment  of  railroad 
property,  every  consideration  that  can  lead  to  a  fair  and  just 
appraisement  of  these  properties  is,  as  far  as  is  possible  with 
the  means  available  to  the  Commission,  fully  considered.  While 
the  law  may  not  be  considered  specific  it  is  in  its  terms  general 
enough  to  permit  the  Commission  to  take  into  consideration 
every  possible  factor  that  contributes  to  value  or  that  goes  to 
make  up  value. 

While  there  has  been  an  occasional  demand  on  the  part  of 
some  members  of  the  Tax  Commission  that  the  law  set  up  a 
formula  whereby  railroad  valuations  shall  be  determined,  it 
would,  in  our  opinion,  be  a  mistake  to  try  to  do  so.  The  law  as 
it  stands,  in  our  opinion,  is  sufficiently  specific,  and  it  would  be 
confusing  rather  than  otherwise  to  elaborate  it.  The  laAV  as  it 
stands  directs  the  Commission  to  "determine  the  actual  value 
of  all  property  belonging  to  the  railroads,  telegraph,  telephone, 
express,  -sleeping  car,  transportation  companies,  within  the 
State  of  New  Mexico  which  is  used  in  the  operation  of  their 
lines." 

Under  that  provision  of  the  law  the  Tax  Commission  in 
recent  years,  with  the  co-operation  of  the  railroad  c()mi)anies 
has  on  the  whole  reached  a  more  adequate  and  just  assessed 
valuation  on  railroad  properties  than  has  been  reached  in  re- 
spect to  any  other  class  of  propei'ty  within  the  state.  The 
practice  which  has  actually  been  reached  in  this  state  in  re- 
gard to  the  assessment  of  railroad  property,  while  it  could 
undoubtedly  be  improved  and  perfected  wnth  greater  facilities 
and  moT'e  elaboration  in  the  technique  of  the  commission,  is 


130  REPORT  OF  THE  NEW  MEXICO 

sneh  as  to  encourage  the  belief  that  with  similar  co-operation 
between  other  classes  of  property  holders  and  the  tax  commis- 
sion, similarly  adequate  assessments  could  be  reached  by  other 
large  classes  of  property  holders. 

It  has  been  the  aim  and  intent  of  this  commission  in  its  in- 
quiries to  try  to  bring  about  a  system  whereby  all  classes  of 
property  can  be  given  the  same  kind  of  consideration  that  is 
now  given  the  railroads  in  arriving  at  their  assessable  valua- 
tions. It  is  a  fact  in  connection  Avith  railroad  assessments  that 
ultimately  all  the  statistics  concerning  their  operation  are 
nuide  available  to  the  tax  commission  either  through  the  inter- 
state commerce  commission,  the  corporation  commission  or 
through  the  railroads  themselves. 

There  is  in  the  law  providing  for  the  assessment  of  rail- 
roads no  directions  as  to  the  distribution  of  the  valuation  fixed 
by  the  State  Tax  Commission.  Three  methods  are  possible, 
First,  the  operative  property  of  each  road  throughout  the  state 
could  be  assessed  as  a  whole  and  the  valuation  distributed 
to  the  various  counties  in  accordance  with  the  miles  of  main 
track  in  each  county  through  which  the  road  runs.  Within 
the  comity,  a  similar  distribution  of  the  county's  allotment 
would  then  be  made  among  the  school  districts,  cities,  towns 
and  villages  through  Avhich  the  road  runs.  A  second  method 
would  be  to  allocate  to  each  county  all  the  valuation  of  the 
operative  property  of  the  railroad  within  the  county.  This 
method  would,  be  believe,  be  very  difficult  of  application  be- 
cause there  are  elements  of  value  aside  from  fixed  physical 
property  which  Avould  have  to  be  distributed  on  some  basis. 

On  the  whole  the  Commission  favors  the  first  method.  A 
railroad  system  within  the  state  is  not  a  collection  of  segments, 
determined  by  county  lines.  As  a  railroad  it  must  be  valued 
in  the  largest  possible  unit.  The  determination  of  the  value 
would  be  easier  and  the  distribution  would  be  made  more  sim- 
ple and  logical. 

Though  the  Commission  favors  the  first  method,  it  is 
realized  that  the  practice  of  the  State  Tax  Commission  has  re- 
sulted in  a  fairly  satisfactory  method  of  distribution.  The 
present  practice  of  the  State  Tax  Commission  is  to  assess  each 
railroad  in  segments  or  units  Avhich  have  similar  or  uniform 
physical  and  traffic  conditions.  The  valuation  so  fixed  is  then 
distributed  among  counties  through  which  such  segments  or 
units  of  the  railroad  runs  upon  the  basis  of  main  mileage,  ex- 
cept that  there  is  an  allocation  of  the  valuation  or  terminal 
facilities  to  county  and  town  in  which  such  facilities  are  lo- 
cated. On  the  whole  this  method  with  slight  modification  will 
perhaps  prove  the  most  acceptable  and  it  is  therefore  recom- 
mended that  piovisions  be  made  for  the  assessment  of  railroads 


I 


SPECIAL  REVENUE  COMMISSION  131 

in  units  of  stretches  of  track  with  all  operative  property  hav- 
ing substantially  uniform  physical  and  traffic  conditions.  The 
valuation  of  each  unit  should  then  be  distributed  among  the 
counties  according  to  miles  of  main  track.  The  modification 
suggested  would  merely  involve  the  distribution  of  the  assess- 
ment of  terminals  among  the  counties  through  which  the  seg- 
ment or  unit  runs,  with  no  allocation  of  such  terminals.  An 
additional  recommendation  of  the  Commission  is  that  the  time 
of  assessing  railroads,  as  w^ell  as  of  all  other  corporate  property, 
be  so  fixed  as  to  indicate  the  time  as  of  which  such  property 
shall  be,  assessed.  For  instance,  it  is  suggested  that  for  1921 
the  assessment  be  made  in  February,  1921,  as  of  January  1st, 
1921. 

Gasoline  Tax. 

Chapter  93  of  the  law^s  of  1919  provides  for  a  license  fee 
on  all  distributers  of  gasoline,  and  also  an  excise  tax  of  two 
cents  a  gallon  on  the  sale  and  use  of  gasoline.  It  also  pro- 
vides for  th€  apportionment  of  one  inspector  for  each  of  the 
eight  judicial  districts  of  the  state  at  $150.00  a  month  for 
salary  and  traveling  expenses. 

This  law  was  attacked  before  it  became  operative,  by  a  suit 
instituted  in  the  U.  S.  District  Court  of  New  Mexico,  by  the 
Continental  Oil  Company,  the  Texas  Oil  Company  and  the  Sin- 
clair Refining  Company.  The  law  was  assailed  as  unconstitu- 
tional, as  being  interference  with  interstate  commerce,  and  the 
position  was  taken  that  although  it  purported  to  be  on  its  face 
an  inspection  law,  it  was  in  fact  a  taxation  system,  or  an  at- 
tempt to  collect  revenue  under  the  guise  of  inspection. 

The  District  Court  held  the  law  unconstitutional  and  en- 
joined the  state  officers  from  enforcing  it.  This  order  was 
reviewed  by  three  federal  judges  sitting  at  St.  Paul,  Avho  af- 
firmed it,  and  was  again  review  by  the  Supremo  Court  of  the 
United  States  on  appeal  in  the  case  of  0.  0.  Askren  vs.  The 
Continental  Oil  Company.  The  Supreme  Court  likewise  up- 
held the  issuance  of  the  preliminary  injunction.  The  Supreme 
Court  held  that  so  long  as  the  gasoline  remained  in  the  original 
packages  in  which  it  was  brought  into  the  stale,  it  was  pro- 
tected by  the  commerce  clause  of  the  federal  constitution  and 
was  not  subject  to  taxation.  But  that  after  it  was  taken  from 
the  original  packages  it  became  subject  to  the  taxing  power 
of  the  state.  The  case  was  sent  back  to  the  District  Court 
for  its  determination  of  whether  the  constitutional  and  un- 
constitutional portions  of  the  statute  can  be  so  separated  that 
the  good  part  may  stand  and  1lie  bnd  be  disi-egarded.  This 
question  was  ai-gued  before  the  dislrici  court  of  Santa  Fe  in  the 
month  of  October. 


132  REPORT  OF  THE  NEW  MEXICO 

The  principal  faults  in  the  existing  bill,  from  the  legal 
standpoint,  are  as  follows: 

1.  The  inspection  features  serve  no  useful  purpose,  add 
nothing  to  the  legality  of  the  bill,  and  should  be  stricken  out. 

2.  The  language  of  the  present  law  is  general  in  that  it 
applies  to  all  sales  of  gasoline  whether  in  original  packages 
or  from  broken  packages  and  therefore  seems  to  manifest  an 
intention  on  the  pai't  of  the  legislature  to  tax  interstate  com- 
merce. This  should  be  obviated  by  an  entire  change  of  this 
language  so  as  to  make  it  plain  that  only  domestic  business  is 
being  taxed.  This  could  best  be  done  by  entirely  redrafting 
the  law,  although  it  might  be  accomplished  by  inserting  at  the 
various  places  necessary,  the  words  "excepting  gasoline  sold 
in  the  original  packages  in  which  brought  into  the  state." 

In  the  opinion  of  competent  attorneys,  it  is  a  mistake  to 
attempt  to  tax  the  use  of  gasoline  as  the  present  law  does.  The 
Supreme  court  in  its  opinion  pays  no  attention  to  this  word 
but  classifies  the  tax  as  being  an  excise  tax  on  sales.  It  is 
probable  that  an  attempt  to  tax  the  use  of  an  article  would 
be  held  equivalent  to  a  tax  on  the  article  itself,  since  the  right 
to  use  is  incidental  to  the  right  of  ownership.  Therefore  a 
flat  tax  of  so  much  a  gallon  on  the  use  of  gasoline  might  be 
considered  a  property  tax  and  bad  under  our  constitutional 
provision  that  taxes  levied  on  tangible  property  shall  be  in 
proportion  to  its  value. 

The  oil  companies  have  collected  a.  tax  upon  all  gasoline 
since  the  law  became  effective  and  are  under  bond  to  pay 
same  to  the  state  in  case  the  question  of  the  constitutionality 
of  the  law  is  decided  in  favor  of  the  state.  It  is  hoped  that  if 
it  is  finally  decided  that  the  present  law  is  unconstitutional, 
that  the  two  cent  tax  already  advanced  will  be  returned  to 
the  consumer. 

Whatever  the  outcome,  however,  of  the  present  situation, 
we  are  of  the  opinion  that  the  law  should  be  amended  so  as  to 
provide  for  a  one  cent  tax  instead  of  a  two  cent  tax,  and  that 
the  tax  imposed  should  not  be  in  the  nature  of  an  inspection, 
but  collectable  directly  by  the  state  treasurer  as  a  tax  on  do- 
mestic sales  alone.  Moreover,  we  believe  that  the  license  tax 
should  be  subsequently  limited  to  a  license  tax  upon  the  right 
to  engage  in  the  business  of  selling  gasoline  in  intrastate  com- 
merce, specifically  excepting  therefrom  all  interstate  business. 
This  wowld  cut  out  the  inspectors,  which  are  an  unnecessary 
and  superfluous  charge.  They  would,  in  our  opinion,  even 
if  the  present  law  were  operative,  prove  entirely  ineffective. 

We  further  recomend  that  the  attempt  to  tax  the  use  of 
gasoline  independently  of  the  tax  upon  the  sale  of  gasoline 
be  eliminated.     The  tax  upon  the  sale  of  gasoline  will  reach 


SPECIAL  REVENUE  COMMISSION  133 

at  least  98  percent  or  all  the  gasoline  consumed  in  the 
state  of  New  Mexico.  The  remaining  two  per  cent  could  only 
include  such  gasoline  as  was  brought  in  from  without  the  state 
in  original  packages  and  actually  consumed  or  used  by  the 
person  so  bringing  it  in. 

We  believe,  according  to  statistics  furnished  us,  that  the 
amount  of  tax  to  be  collected  under  the  proposed  law  would 
approximate  $75,000.00  a  year,  with  practically  no  expense  in 
collection  of  same. 

The  State  Franchise  Tax. 

Chapter  100  of  the  laws  of  1919  provides  for  a  tax  on 
capital  stock  of  domestic  and  foreign  corporations,  to  be 
assessed  by  the  State  Tax  Commission  and  collected  by  the 
State  Treasurer.  If  this  law  is  retained  it  should,  in  the  opinion 
of  competent  lawyers,  be  amended  in  certain  minor  particulars. 
We  are  in-'-lined  to  believe  that  insofar  as  it  taxes  unused  capi- 
tal stock  it  is  unfair,  and  that  the  tax,  if  it  is  retained,  should 
be  only  on  such  part  of  the  capitalization  as  has  been  issued. 
It  produced  for  1918-1919  the  seventh  fiscal  year,  a  total  of 
$29,63  0.49. 

We  suggest  that  a  reasonable  and  proper  method  for  ad- 
justing this  matter  would  be  the  repeal  of  Chapter  100  of  the 
Laws  of  1919  and  an  amendment  of  Section  1003  of  the  Com- 
piled Laws  of  1915,  pro\iding  for  the  payment  of  an  annual 
franchise  tax  on  domestic  and  foreign  corporations  upon  a 
graduated  schedule  to  be  worked  out  within  the  limitations 
fixed  by  recent  decisions  of  the  Supreme  Court  of  the  United 
States.  Those  limitations  prescribe  that  it  is  beyond  the  poAver 
of  state  taxing  authorities  to  levy  annual  franchise  taxes  for 
the  privilege  of  doing  interstate  business,  and  the  validity  of 
the  present  franchise  tax  law  has  been  questioned  because  of  its 
failure  to  recognize  these  limitations. 

As  to  the  disposition  of  the  tax,  the  commission  find  that 
the  law  providing  for  the  tax  failed  to  indicate  the  method  of 
distribution.  It  is  recommended  that  the  collections  heretofore 
made  be  distributed  as  are  the  taxes  collected  by  the  State 
Treasurer  upon  private  car  companies  and  that  future  collec- 
tions be  distributed  upon  the  same  basis,  that  is,  "to  the  dif- 
ferent state  funds  in  the  state  treasury  except  funds  derived 
from  tax  levies  on  specific  classes  of  property  in  proportion  to 
the  respective  levies  for  the  several  funds." 

Private  Car  Companies. 

Chapter  6  of  the  extraordinary  session  of  1917  provides 
for  a  method  of  taxing  property  of  private  car  coini)anies  Avith- 
in  the  state  and  is,  we  believe,  satisfactory  in  all  respects  ex- 


134  REPORT  OF  THE  NEW  MEXICO 

cept  as  to  tho  method  of  allocating'  the  pi-oper  number  of  cars 
to  the  state  so  as  to  determine  the  taxable  value  of  the  proper- 
ty within,  the  state. 

Subdivision  2  of  section  1  of  the  law  as  now  written  pro- 
vides that  a  valuation  of  rolling  stock  for  the  purpose  of 
assessment  shall  be  such  proportion  of  the  value  of  the  prop- 
erty of  such  companies  as  the  aggregate  number  of  all  car 
miles  made  or  traveled  within  the  state  bears  to  the  whole 
number  of  car  miles  traveled  in  this  and  all  other  states. 

This  method  of  valuation  whereby  one  of  the  factors  in- 
cludes all  property  of  such  private  car  companies  is  clearly  un- 
constitutional as  an  attempt  to  tax  property  beyond  the  juris- 
diction of  the  state  and  has  been  so  held  by  the  supreme  court 
of  the  United  States  in  a  number  of  recent  decisions. 

We  are  informed  that  the  State  Tax  Commission  has  rec- 
ognized the  unconstitutionality  of  this  section  and  has  in  prac- 
tice made  the  assessment  upon  such  a  basis  as  not  to  include 
any  property  beyond  the  taxing  power  of  the  state. 

We  therefore  recommend  that  the  present  law  be  amended 
so  as  to  provide  for  the  assessment  upon  a  basis  which  Avill  not 
include,  as  does  the  present  law,  the  objectionable  features 
hereinbefore  referred  to. 

Express  Companies. 

In  the  assessment  of  private  car  companies  we  find  that  the 
express  companies  practically  escape  assessment  because  of  the 
fact  that  such  companies  own  no  rolling  stock,  their  business 
being  carried  on  in  ears  owned  by  the  railroads.  The  only 
property  assessed  is  real  and  personal  property  located  in 
toAvns  Avhere  offices  are  maintained.  In  order  to  reach  this 
class  of  property  it  is  suggested  that  the  gross  receipts  be  taken 
as  a  basis  and  a  law  prepared  that  will  bring  the  property  of 
such  companies  under  taxation. 

Assessment  of  Banks. 

The  Commission  i-ecom mends  that  the  law  covering  bank 
assessment  should  be  made  moi-e  specific.  It  should  provide 
the  shares  of  stock  should  be  assessed  at  their  actual  value  and 
shall  not  be  less  than  the  total  of  the  capital  stock,  surplus 
and  undivided  profits.  In  arriving  at  the  assessment,  the  book 
value  of  all  real  estate  including  improvements  owned  by  the 
bank,  sho'uld  be  deducted  from  the  total  of  the  capital  sur- 
plus and  undivided  profits  and  such  real  estate  and  improve- 
ments should  be  assessed  as  other  property  of  the  same  class. 
Fui'thei-niore  such  real  estate  and  improvements  should,  we 
believe,  be  assessed  in  the  county  where  it  is  located  and  the 
taxes  thereon  paid  in  that  county. 


SPECIAL  REVENUE  COMMISSION  135 

Automobiles. 

In  1916,  the  tax  rolls  showed  4,113  automobiles  of  the  aver- 
age assessed  value  of  $335.56;  in  1917 — 7,197  of  the  average 
assessed  value  of  $334.12;  in  1918—11,713  automobiles  of  the 
average  assessed  value  of  $370.51 ;  in  1919—13,810  automobiles 
of  the  average  assessed  value  of  $367.14.  That  considerable 
discrepancy  exists  between  the  number  assessed  and  the  actual 
number  within  the  state  is  apparent  from  the  number  licensed 
in  1920.  According  to  the  secretary  of  state  the  number  of 
licenses  issued  up  to  November  8,  1920,  was  21,831.  Deduct- 
ing 500  automobiles  owned  by  federal,  state  and  local  govern- 
ments and  1,000  owned  by  transients,  there  should  be  found 
about  20,000  automobiles  on  the  1920  tax  roll.  If  only  the 
average  increase  in  number  of  sessessed  automobiles  is  main- 
tained, the  number  foiind  on  such  tax  rolls  will  not  exceed 
16,0000,  leaving  4,000  apparently  unassessed. 

At  an  average  assessment  of  $375.  the  total  loss  in  taxable 
property  as  to  this  class  is  $1,500,000. 

The  method  used  by  the  State  Tax  Commission  has  ac- 
complished splendid  results  in  reaching  motor-vehicles  for  as- 
sessment. To  bring  about  a  complete  assessment,  it  is  recom- 
mended that  applications  for  licenses  be  required  by  the  collect- 
ing agency  in  duplicate  and  that  one  copy  be  furnished  to  the 
State  Tax  Commission.  Such  petition  should  set  forth  such 
facts  as  will  enable  the  State  Tax  Commission  to  certify  to 
the  several  local  assessors  the  valuation  to  be  placed  upon 
automobiles  in  their  respective  counties. 

Public  Utilities. 

Your  Commission  is  of  the  opinion  that  all  public  utilities, 
including  gas,  electric  light,  power  and  water  plants  should  be 
brought  under  the  direct  assessing  supervision  of  the  State 
Tax  Commission. 


CHAPTER  VIII. 

COLLECTION  OF  TAXES,  EXEMPTIONS,  COUNTY  AND 
MUNICIPAL  COSTS,  SCHOOLS,  ETC. 

Page 

Collection  of  taxes  137 

Exemptions 142 

County  government  147 

The  grand  jury  system  in  New  Mexico 151 

Cities,  towns  and  villages 153 

State  drainage  taxes  154 

Fireman's  volunteer  associations 155 

State  boundary  suits  _ 156 

Untaxable  lands  157 

Public  elementary  and  high  schools 160 


SPECIAL  REVENUE  COMMISSION  137 

CHAPTER  VIII. 

COLLECTION  OF  TAXES,  EXEMPTIONS,  COUNTY  AND 
MUNICIPAL  COSTS,  SCHOOLS,  ETC. 

The  delinquent  tax  evil  is  midoubtedly  one  of  the  most 
perplexing  problems,  if  not  the  most  so,  of  the  many  presented 
for  our  consideration.  To  frame  a  law  which  can  adequately 
deal  with  it  presents  the  greatest  difficulties.  To  secure  the 
passage  of  such  a  law  is  even  more  difficult.  A  law  sufficient- . 
ly  stringent  to  adequately  meet  the  situation  must  be  such  as 
may  sometimes  work  hardships  on  honest  citizens.  This  may  be 
said  of  almost  any  law.  But  if,  as  in  this  case,  the  law  does 
not  stringently  guard  all  possible  avenues  of  escape  and  eva- 
sion, the  effect  is  indeed  discouraging. 

That  the  present  system  is  a  failure  is  evidenced  by  the  fact 
that  of  the  total  of  $9,414,937.82  levied  for  the  year  1919,  only 
$7,789,258.24  had  been  collected  on  June  30,  1920.  Of  taxes 
levied  for  any  year,  not  over  95  per  cent  are  ever  collected 
for  the  state  as  a  whole.  The  last  published  report  of  the 
State  Tax  Commission  shows  that  on  October  31,  1918,  collec- 
tions for  various  years  had  been  made  as  follows:  1912 — 94.69 
per  cent;  1913—93.69  per  cent;  1914—93.08  per  cent;  1915— 
92.24  per  cent ;  1916—92.14  per  cent ;  1917—86.36  per  cent.  It 
is  probable  that  at  the  present  time,  there  are  taxes  uncollected 
to  an  amount  of  over  $3,250,000.00. 

The  chief  cause  for  the  breakdo^vn  of  the  state's  collec- 
tion system  lies  in  the  weakness  of  the  assessment  methods. 
These  methods  have  been  elsewhere  discussed  and  the  neces- 
sary revisions  indicated.  It  is  safe  to  say  that  under  an  ade- 
quate administration  of  our  assessment  system,  the  difficulties 
in  collecting  taxes  will  be,  to  a  great  extent,  eliminated. 

Various  efforts  have  been  made  to  secure  better  results 
in  collecting  the  revenues  of  the  state  and  each  legislature  has 
struggled  Avith  the  problem.  At  the  present  time  the  county 
treasurer  and  collector,  an  elected  official  is  primarily  charged 
with  the  duty  of  collection.  In  some  counties  where  assessments 
are  properly  made  and  the  treasurer  is  competent,  nearly  all 
taxes  are  collected,  indicating  that  even  under  a  poor  system. 
capable  officials  can  secure  good  results.  But  in  many  counties, 
conditions  as  to  land  descriptions  are  so  bad  as  to  make  the 
enforcement  of  tax  collection  laws  extremely  difficult. 

The  penalty  of  one  per  cent  per  month  for  non-payment 
of  taxes  and  costs  and  provisions  for  the  sale  of  property  in- 
volved has  not  proved  effective.  An  additional  penalty  of 
10  per  cent  of  the  total  amount  duo  for  the  services  of  special 
attorneys  has  somewhat  improved  conditions,  but  not  by  any 


138  REPORT  OF  THE  NEW  MEXICO 

means,  to  the  extent  desired  and  anticipated.  These  attorneys 
as  a  rule  secure  the  collection  of  taxes  more  promptly,  but  it 
is  questionable  whether  they  collect  very  much  that  would 
not  eventually  be  paid.  The  cost  of  employing  these  attorneys 
fall  upon  the  delinquent  taxpayer  wholly  as  the  10  per  cent 
applies  only  to  taxes  actually  collected. 

The  cost  of  publication  of  the  delinquent  tax  list  is  in- 
tended to  be  borne  by  the  delinquent  taxpayer.  This  is  true 
in  only  a  part  of  the  counties.  In  others,  the  cost  collections 
.  are  insufficient,  the  results  being  that  payments  must  be  made 
to  the  printer  out  of  the  general  county  fund.  This  gives  rise 
to  an  intolerable  situation  for  it  makes  those  who  pay  their 
taxus  promptly  and  fully  bear  part  of  the  cost  of  publishing 
the  lists  of  those  who  do  not  pay.  It  is  conservatively  esti- 
mated that  a  total  of  $30,000  is  paid  thus  each  year  out  of  the 
general  county  funds.  The  publication  costs  under  rates  es- 
tablished by  the  last  legislature  run  to  enormous  totals  in 
certain  counties.  In  comparison  with  years  when  no  news- 
paper publication  was  required,  the  results  are  no  better. 

There  is  much  difference  of  opinion  amongst  competent 
students  of  the  subject,  first,  as  to  the  validity  of  measures 
for  the  sale  of  property  for  delinquent  taxes  without  the  in 
tervention  of  legal  process;  and  secondly,  as  to  the  policy  of 
enacting  such  measures  if  they  be  valid.  We  do  not  feel  our- 
selves competent  to  pass  upon  the  first  of  these  questions,  but 
are  inclined  to  believe  that  properly  framed  measures  for  the 
sale  of  delinquent  property  directly  by  the  treasurer  without 
intervening  court  proceedings  and  judgment  would  be  valid. 
As  to  the  second  phase  of  the  matter,  we  think  that  if  possible 
such  a  measure  should  be  adopted.  In  any  case  we  recommend 
that  any  law  providing  for  the  procedure  in  the  matter  of  tax 
collections  from  delinquents  should  provide  that  sixty  days 
after  the  taxes  have  become  delinquent,  the  current  tax  rolls 
should  be  closed  and  that  all  delinquents  with  the  description 
of  their  property  be  entered  in  a  separate  "Delinquent  Tax 
Book,"  upon  which  all  steps  taken',  judicial  or  otherwise,  to- 
ward the  enforcement  of  the  collection  should  until  final  settle- 
ment or  sale  be  entered  in  detail. 

We  further  recommend  in  any  case,  that  the  present  prac- 
tice of  newspaper  publication  of  delinquent  tax  lists  be  abol- 
ished ;  that  newspaper  publication  of  delinquent  taxes  be  in  the 
future  confined  either,  first  to  a  general  warning  of  the  time 
of  delinquency  and  the  serving  of  notice  upon  all  taxpayers 
to  examine  the  delinquent  tax  books  and  delinquent  lists  posted 
in  the  treasurer's  office;  or,  second,  to  a  sincrle  or  limited  num- 
ber of  publications  of  the  names  only  of  delinquents  without 
description  of  the  property. 


SPECIAL  REVENUE  COMMISSION  139 

Any  taxpayer  knows  or  should  know  whether  he  has  paid 
his  taxes  or  not.  If  he  has  paid  them  they  should  be  credited 
to  him  on  the  county  books.  The  tax  receipt  is  evidence  that 
such  credit  on  the  books  has  been  made.  If  through  error  such 
entry  has  not  been  made,  sufficient  notice  is  certainly  given 
by  the  publication  of  his  name  without  a  description  of  the 
property.  We  think  that  in  view  of  the  faulty  records  in  many 
of  our  county  treasurers'  offices,  all  taxpayers  should  for  self- 
protection  see  to  it  that  they  are  credited  on  the  records  when 
they  pay  their  taxes. 

It  does  not  appear  that  there  is  any  good  reason  why  those 
Avho  disregard  the  tax  laws  should  be  subject  to  so  much  great- 
er consideration  than  all  others  who  disobey  the  laAvs,  or  why 
citizens  who  do  pay  their  taxes  should  be  subjected  to  large 
and  continuous  expense  (as  is  now  the  case  here)  for  pub- 
lishing descriptions  of  delinquent  property;  or  for  the  costs 
of  court  procedure  to  enforce  collection  or  perfect  tax  sales, 
if  such  collections  or  tax  sales  can  equally  Avell  be  perfected 
and  much  more  simply  and  at  far  less  expense. 

If  our  taxing  system  is  bad  or  unfair,  then  the  laws  should 
be  repealed  or  amended  so  as  to  make  it  good;  and  if  the  ad- 
ministration is  bad  the  remedy  lies  in  the  hands  of  the  people 
themselves. 

All  tax  collection  laws  should  and  do  give  every  oppor- 
tunity to  delinquents  to  adjust  their  delinquencies  by  payment 
or  redemption.  They  should  not  be  such  as  to  charge  those 
who  do  promptly  comply  with  the  tax  laws  with  any  more  of 
the  burden  of  tlie  failure  of  those  who  do  not  so  comply  than 
is  absolutely  necessary.  They  certainly  should  not  be  such^  as 
will  directly  or  indirectly  encourage  evasion,  permit  evasion 
or  compromise  on  the  the  part  of  those  who  through  vigilance, 
bravado  or  cunning  regularly  attempt  to  avoid  paying  their 
taxes.  There  are  many,  big  and  little,  in  this  category  in  New 
Mexico,  as  in  all  other  states. 

We  are,  therefore,  decidedly  in  favor  of  a  stringent  tax 
collection  law  on  the  general  lines  above  indicated.  We  think 
the  present  law  could  be  greatly  strengthened,  and  before  the 
legislature  meets  we  Avill  have  prepared  alternative  drafts  of 
new  laws  for  its  consideration  with  that  end  in  view. 

When  real  estate  is  not  of  sufficient  value  to  cover  the 
cost  of  personal  proper-ty  taxes  as  well  as  those  on  the  real  es- 
tate, the  assessor  should  immediately  certify  to  the  treasurer 
and  collector  the  value  of  the  property  and  the  tax  thereon 
using  the  rate  of  previous  year  to  compute  the  tax.  The  treas- 
urer should  then  at  once  serve  notice  upon  the  taxpayer  that 
said  taxes  will  be  due  and  payable  within  thirty  days.    Failure 


140  REPORT  OF  THE  NEW  MEXICO 

of  taxpayer  to  pay  tax  should  result  in  seizure  of  property  by 
distraint  and  the  sale  thereof  to  cover  taxes  due. 

The  foregoing  suggestions  are  made  to  indicate  lines  along 
which  revision  of  present  laws  should  proceed.  Taxes  due 
upon  all  forms  of  property  owned  by  anyone  should  be  a  lien 
upon  all  the  property  he  owns.  No  defense  should  be  per 
missible  except  that  the  taxes  have  been  paid  or  that  the  prop- 
erty was  not  subject  to  taxation. 

The  method  proposed  for  collecting  the  tax  on  personal 
property  would  apply  to  livestock  brought  into  the  state  after 
September  first  and  removed  therefrom  prior  to  the  determi- 
nation of  levies  for  the  succeeding  year.  In  cases  of  transient 
herds  or  flocks  kept  in  the  state  for  a  very  short  time  only, 
the  law  should  provide  for  a  charge  against  the  owner  accord- 
ing to  number  of  head  in  such  herd  or  flock  and  according 
to  the  time  during  which  they  are  within  the  state.  The 
collection  of  the  charge  should  be  made  the  duty  of  the  treas- 
urer who  would  have  the  same  powers  as  in  the  case  of  the 
collection  of  personal  taxes.  One-third  of  such  collections 
might  be  sent  to  the  state  treasurer,  one-third  covered  into  the 
general  county  fund  and  one-third  into  the  general  county 
school  fund. 

The  present  law  relating  to  the  publication  of  delinquent 
tax  lists  was  passed  at  the  last  session  of  the  legislature.  It 
provides  for  the  publication  of  the  list  four  times,  7  cents 
a  line  for  the  first  insertion  and  four  cents  a  line  for  each 
of  the  next  three,  a  total  of  19  cents  a  line.  It  has  been  held 
that  publication  in  both  English  and  Spanish  is  required  and 
this  is  done  in  some  counties  which  doubles  the  cost  of  the 
publication. 

The  rates  are  maximum  and  it  is  possible  for  county  treas- 
urers to  let  the  printing  of  the  list  to  the  lowest  responsible 
bidder  ,and  in  counties  where  this  his  been  done  a  rate  as  low 
as  four  cents  a  line  for  the  first  insertion  and  three  cents  a  line 
for  each  of  the  next  three,  a  total  of  thirteen  cents  a  line  has 
been  secured.  Responsible  printers  have  advised  us  that  a  rate 
of  five  cents  a  line  for  the  first  insertion  and  three  cents  for 
each  of  the  next  three  would  be  high  enough  to  provide  ade- 
quate profit. 

It  is  found  that  in  published  lists  there  is  much  spreading 
of  type  to  cover  space  and  increase  the  cost.  If  the  publication 
of  delinquent  tax  lists  is  continued  it  should  be  pro%aded  that 
the  setting  must  be  solid.  The  laAv  should  specifically  provide 
also  that  the  printing  of  the  list  should  be  in  one  language 
only,  the  preliminary  notice  and  statement  being,  however, 
printed  in  both  languages. 


SPECIAL  REVENUE  COMMISSION  141 

The  Special  Revenue  Commission  finds  it  difficult  to  be- 
lieve that  the  printing  of  delinquent  tax  lists  accomplishes  anj^ 
more  than  the  posting  of  such  lists  as  was  required  by  the  law 
of  1917.  The  improvement  in  tax  collections  is  very  slight  even 
though  special  attorneys  were  provided  for  by  the  law  of  1919 
to  bring  about  a  better  collection.  The  small  increase  in  the 
percentage  of  taxes  collected  may,  in  fact,  indicate  only  an  im- 
provement in  the  promptness  of  payment  and  not  in  the  total 
eventually  collected.  Upon  this  point  one  treasurer  writes: 
"As  far  as  collections  are  concerned  I  do  not  see  that  the  publi- 
cation of  an  itemized  list  helps  any."  Others  express  the  same 
feeling  and  accurate  figures  seem  to  bear  out  the  conclusion  of 
the  Commission  that  the  publication  of  delinquent  tax  lists  re- 
sult in  little  or  no  improvement  in  the  amount  of  taxes  col- 
lected. 

The  greatest  objection  to  the  publication  of  delinquencies 
does  not  lie  in  the  exorbitant  cost  of  the  advertising  but  in 
the  fact  that  the  burden  does  not  fall  upon  the  delinquents 
but  upon  those  who  pay  taxes.  .  This  statement  is  not  based 
upon  hearsay.  One  treasurer  writes  that  the  cost  of  publica- 
tion in  his  county  was  over  $1200  for  the  1919  list.  Only  $125 
was  collected  from  delinquents  and  the  balance  of  over  $1000 
was  paid  from  general  county  taxes.  Another  states  that  the 
publication  in  his  county  cost  $1800  of  which  one-third  only 
was  paid  by  delinquents.  In  another  county  $650  was  paid  for 
publishing,  while  only  $120  was  collected  from  delinquents. 
These  are  counties  in  which  the  lists  are  comparatively  short. 
There  are  several  counties  in  which  the  cost  of  advertising 
exceeds  $2500.  In  certain  counties  it  mounts  to  $5000  and  in 
one  to  $7500.  In  such  counties  these  figures  moan  that  a 
large  amount  of  tax  delinquency  is  published  which  will  never 
be  collected  and  the  cost  must,  therefore,  be  paid  out  of  the 
general  county  funds.  It  is  possible  that  as  much  as  $40,000 
is  thus  charged  against  those  who  do  pay  their  taxes. 

In  view  of  the  foregoing  considerations  we  recommend ' 
specifically  that  the  law  requiring  the  publication  of  delinquent 
tax  lists  be  repealed.  It  is  an  uncalled  for  and  unjustifiable 
waste.  "We  also  recommend  the  discontinuance  of  the  employ 
ment  of  special  attorneys,  and  that  adequate  provision  be  made 
for  securing  full  collections  of  delinquent  taxes  through  the 
district  attorney's  office. 


142  REPORT  OF  THE  NEW  MEXICO 

Total  Taxes  Due 

Amount  Collected  and  Amount  Unpaid 
Aug-ust  31,  1920 


Year 

Total 

Collected 

% 

Unpaid 

% 

1912 

$3,481,074.80 

$3,333,393.83 

95.75 

$    147,680.97 

4.25 

1913 

4,207,353.41 

3,983,171.01 

94.90 

224,182.40 

5.10 

1914 

3,987,881.52 

3,772,449.11 

94.59 

215,432.41 

5.41 

1915 

4,272,072.53 

3,972,873.21 

92.99 

299,199.32 

7.01 

1916 

4,343,793.95 

4,103,160.12 

94.46 

240,633.83 

5.54 

1917 

5,947,338.91 

5,513,118.17 

92.69 

434,220.74 

7.31 

1918 

6,679,351.73 

6,169,717.51 

92.37 

509,634.22 

7.63 

1919 

9,405,510.94 

8,219,954.05 

87.39 

1,185,556.89 

12.61 

Total 

$42,324,377.79  $39,067,837.01 

92.31 

$3,256,540.78 

7.69 

Exemptions. 

The  constitutional  clauses  in  respect  to  tax  exemptions  are 
contained  in  Sections  3  and  5,  Ai-ticle  VIII  of  the  constitution 
of  the  state.    These  sections  are  as  follows : 

Section  3.  The  property  of  the  United  States,  the 
State  and  all  Counties,  Towns,  Cities  and  School  Districts 
and  other  municipal  corporations,  public  libraries,  com- 
munity ditches  and  all  laterals  thereof,  all  church  property, 
all  property  used  for  educational  and  charitable  purposes, 
all  cemeteries  not  used  or  held  for  private  or  corporate 
profit  and  all  bonds  of  the  state  of  New  Mexico,  and  of  the 
counties,  municipalities  and  districts  thereof  shall  be  ex- 
empt from  taxation. 

Section  5.  The  legislature  may  exempt  from  taxation 
property  of  each  head  of  a  family  to  the  amount  of  two 
hundred  dollars. 

Chapter  CVII  of  the  Compiled  Laws  of  1915,  Sections  5427 
and  5433  contains  statutory  enactments  in  regard  to  exemp- 
tions.   These  exemptions  include : 

1.  $200  exemption  to  the  head  of  a  family. 

2.  Property  of  the  United  States. 

3.  Property  of  the  State. 

4.  Property  of  the  Counties. 

5.  Property  of  the  Cities  and  Towns. 

6.  Public  Libraries. 

7.  Property  of  literary  institutions. 

8.  Property  of  scientific  institutions. 

9.  Property  of  benevolent  institutions. 
10.     Property  of  agricultural  institutions. 


SPECIAL  REVENUE  COMMISSION  143 

11.  Property  of  religious  institutions. 

12.  Community  irrigation  ditches,  canals  and  flumes. 

13.  Cemeteries  not  held  for  profit. 

14.  All  new  irrigation  reservoirs,  canals  and  ditches  for 
a  period  of  six  years. 

15.  New  railroads  for  six  years  after  opening  for  business. 

16.  Mining  claims  until  one  year  after  patent  is  issued. 

17.  Certain  Homesteads  valued  at  less  than  $200.  (Chap- 
ter 78,  Laws  1917.) 

18.  $2000  exemption  to  soldiers  and  sailors.  (Chapter  165, 
Laws  1919.) 

Items  Nos.  14  and  15  are  held  to  be  not  exempt  from  tax- 
ation for  the  reason  that  they  do  not  come  within  any  of  the 
classifications  exempt  under  the  constitution. 

Item  No.  17  applies  only  to  the  assessement  of  such  home- 
steads prior  to  the  year  1908  and  the  statute  does  not  apply 
to  assessments  of  such  property  since  that  year. 

All  the  above  may  be  called  constitutional  or  statutory 
exemptions.  In  addition  to  the  property  so  exempted  from 
taxation  within  the  state  there  are  within  the  state,  according 
to  data  prepared  bj'  the  Governor,  over  thirty-one  millions  out 
of  the  seventy-eight  and  a  half  million  acres  of  land  in  the 
state  that  are  untaxed.    This  acreage  is  divided  as  follows: 

Unreserved  and  unappropriated  lands 18,785,723  acres 

Forest  Reserves - 8,294,222  acres 

Indian  Reservations  4,543,692  acres 

Total 31,623.637  acres 

(Note:    See  article  on  "Untaxable  Lands".) 

The  generally  accepted  principle  now  is  that  taxation 
should  be  universal  and  that  every  person  in  the  jurisdiction 
of  a  government  should  contribute  to  the  support  of  that  gov- 
ernment in  a  proper  proportion.  The  exceptions  of  any  indi- 
vidual or  class,  in  part  or  in  whole,  is  favoritism  or  privilege 
and  as  such  is  indefensible. 

(See  report  of  committee  on  tax  exemptions  National  Tax 
Association,  1920.) 

It  follows  that  the  only  ground  foi-  absolute  exemption 
from  taxation  either  of  property  or  income  is  absolute  ])ublic 
use,  and  the  custom  generally  followed  here,  as  in  all  other 
parts  of  the  United  States  of  exeui])1ing  from  all  taxation  all 
property  belonging  to  any  branch  of  rTOvernment  "when  de- 
voted entirely  to  public  use  and  not  held  for  pecuniary  profit" 


141  REPORT  OF  THE  NEW  MEXICO 

is  iloTihtlcss  a  ])1'(»])(m-  oho,  although  there  are  some  peculiar  in- 
stances in  whicli  such  exemptions  bring  cliJi'iculties. 

The  exemption  from  the  property  tax  of  quasi-public  prop- 
erty, such  as  that  enumerated  in  items  6  to  11  above,  while  in 
our  opinion  quite  illogical  and  provocative  of  much  abuse,  has. 
apparently  met  with  general  public  approval  and  the  support 
of  church-goers  and  other  beneficiaries  who  are  instrumental 
in  the  formation  of  public  opinion.  It  seems  useless  to  criticise 
these  exemptions  although  it  should  be  obvious  that  whatever 
reason  may  exist  for  holding  this  property  as  private  property 
ig  equally  good  reason  for  paying  taxes  thereon. 

Our  constitutional  and  statutory  provisions  as  to  the  ex- 
emption of  "church"  and  "religious"  properties  are  very 
broad  but  there  is  nowhere  in  our  statute  books  definitions  as 
to  what  these  terms  mean.  There  is  apparently  nothing  what- 
ever to  prevent,  in  these  times  of  fads  and  fadists,  taxing  of- 
ficials from  interpreting  these  terms  so  as  to  include  almost 
any  sort  of  an  organization  however  remote  it  may  be  from 
what  most  of  us  have  been  accustomed  to  regard  as  religion. 
When  besides  "religious"  institutions,  there  can  be  exempted 
at  the  discretion  of  the  taxing  authorities  "literary",  "scien- 
tific", "benevolent"  and  "agricultural"  institutions,  none  of 
which  are  defined  or  specified,  the  range  of  discretion  in  the 
taxing  authorities  is  very  broad  indeed.  This  often  really 
amounts,  in  an  indirect  way  to  the  securing  of  state  support 
for  and  an  enforced  contribution  to  the  adherents  of  a  par- 
ticular faith  from  those  who  have  n0  sympathy  with  it. 

Section  5430  of  the  Compiled  Laws  of  1915,  defining  the 
exemptions  in  regard  to  benevolent,  religious  and  other  insti- 
tutions contains  the  distinct  proviso  that  they  may  be  exempted 
from  taxation 

"when  the  property  of  such  institutions  and  societies  shall 
be  devoted  exclusively  to  the  appropriate  ol)jects  of  such 
institutions  and  not  leased  or  rented  or  otherwise  used 
with  a  view  to  pecuniary  profit  *  *  *  " 

There  are  certain  institutions  in  the  state  exempted  from 
taxation  under  this  law  which  properly  should  not  be,  because 
quite  all  right  for  the  legislature  to  make  these  grants  to  these 
institutions,  which  are  very  useful  and  worthy  institutions 
indeed,  not  only  are  exempted  from  taxation  but  receive  con- 
siderable subsidies  direct  from  the  legislature.  We  think  it  is 
quite  all  I'ight  for  the  legislature  to  make  these  grants  to  these 
institutions,  if  it  actually  can  afford  it,  but  we  believe  that 
when  they  are  actually  operated  with  a  view  to  pecuniary 
profit,  in  whole  or  in  pai-t,  they  should  be  subject  to  taxation 
as  all  othei'  private  property. 


SPECIAL  REVENUE  COMMISSION  145 

We  recommend  that  Section  5430  of  the  Compiled  Laws 
of  1915  be  amended  so  as  to  more  specifically  define  the  prop- 
erty to  be  exempted  from  taxation  under  the  constitution  and 
clearly  state  what  constitutes  "church  property,"  and  "all 
property  used  for  educational  and  charitable  purposes,"  as 
those  terms  are  used  in  Section  3,  Article  YIII  of  the  consti- 
tution. 

It  is  the  general  concensus  of  opinion  throughout  the  state 
of  those  who  have  given  the  matter  careful  consideration  that 
the  $200  exemption  granted  to  the  bona  fide  head  of  a  family 
is  abused  in  practice  and  that  greater  care  on  the  part  of  the 
assessing  officers  Avould  result  in  the  cutting  down  very  ma- 
terially of  the  total  of  the  exemptions  granted  under  this  pro- 
vision. According  to  the  statistics  compiled  by  the  State  Tax 
Commission  this  exemption  aggregates  about  $8,000,000  annu- 
ally, the  figures  for  the  last  four  years  being  as  follows : 

1916 $7,735,363 2.29  percent 

1917 7,810,498 2.13  per  cent 

1918 8,021,215 2.05  per  cent 

1919 7,840,391 2.03  per  cent 

We  do  not  believe  that  the  policy  of  exempting  new  irri- 
gation plants  and  new  railroads  for  six  years  is  a  sound  one 
or  that  there  is  any  more  good  reason  for  exempting  them  than 
there  is  for  exempting  any  other  sorts  of  new  enterprises.  The 
precedent  is  a  bad  one  and  the  principle  unsound.  We  recom- 
mend that  Sections  5431  and  5432  of  the  Compiled  Laws  of 
1915  be  repealed. 

As  for  Chapter  165  of  the  Laws  of  1919  granting  a  $2000 
exemption  to  ex-service  men  we  are  firmly  of  the  opinion  that 
it  is  unconstitutional  and  Avould  be  so  held  if  the  matter,  were 
tested  in  the  courts.  Sections  1  and  2  of  Article  VIII  of  the 
Constitution  and  Section  5427  of  the  compiled  laws  taken  to- 
gether with  Section  3  of  the  Constitutional  Article  with  Sec- 
tions 5428  and  5433  of  the  Laws,  (quoted  above)  which  speci- 
fically define  just  what  exemptions  are  permitted,  clearly  in- 
dicate that  no  other  exemptions  are  possible  under  our  laws. 

In  any  case  we  are  strongly  opposed  to  this  law  or  to  any 
laws  specifically  granting  exemptions  as  bounties.  We  are  in 
accord  Avith  the  opinion  of  the  Committee  of  the  National  Tax 
Association  who  say  in  regard  to  tliis  sort  of  exemptions  that 
it  believes  them  to  be  unsound  and  that  if  a  grateful  people 
wish  to  reward  or  support  Avar  veterans  and  other  public  ser- 
vants there  is  the  more  direct  and  dignified  method  of  pensions 
available.  The  exemption  is  a  poor  form  of  bounty  and  can 
neA'er  be  regarded  as  a  dignified  way  of  meeting  a  strongly 


146  REPORT  OF  THE  NEW  MEXICO 

felt  public  obligation.  The  law  has  already  been  abused  and 
numerous  instances  have  come  to  our  notice  where  property 
has  been  divided  amongst  ex-service  men  in  order  to  avoid 
the  payment  of  taxes.  It  is  also  suggested  that  this  exemption 
is  a  discriminatory  form  of  recognitiion  of  ex-service  men,  the 
one  having  property  being  the  only  one  to  receive  such  recog- 
nition. We  recommend  the  repeal  of  Chapter  165,  Laws  of 
1919. 

As  to  the  $200  exemption  allowed  each  head  of  a  family, 
we  believe  it  should  apply  only  to  personal  property  and  not 
to  real  estate.  We  recommend  that  the  law  be  changed  in  this 
respect.  Section  14,  Chapter  54  of  the  Laws  of  1915  should  be 
repealed  and  this  exemption  should  be  granted  only  when 
claimed  under  oath  as  provided  for  under  Section  5428  of  the 
1915  Code. 

There  is  now  pending  in  the  State  Supreme  Court  a  case 
which  seeks  to  establish -by  what  seems  to  be  a  very  strained 
and  specious  interpretation  of  the  law,  the  principle  that  com- 
munity land  grants,  insofar  as  they  have  not  been  assigned  in 
severalty,  are  untaxable.  The  case  is  brought  in  behalf  of  a 
grant  most  of  which  is  already  held  in  private  not  minor  own- 
ership ;  but  it  is  evident  that  should  the  contention  be  upheld 
the  effect  will  be  to  entirely  exempt  other  grants,  the  titles 
of  which  have  passed  without  partition  or  segragation  from  the 
Spanish  grantees,  and  it  is  also  evident  that  such  is  the  pur- 
pose of  the  present  stiit.  Should  it  succeed  then  still  greater 
areas  of  our  land  would  be  placed  in  the  category  of  tax  ex- 
empt lands  and  the  resultant  burden  on  remaining  lands  and 
other  property  would  be  proportionately  increased. 

There  seems  to  be  a  difference  of  opinion  amongst  those 
Avho  have  studied  the  subject  as  to  the  actual  status  of  the 
Pueblo  Indians  in  this  state,  as  to  citizenship.  We  invite  the 
readers  attention  to  that  part  of  the  committee  hearings  on 
that  question  (pp.  148-151).  In  fact  neither  the  Pueblos  nor 
any  other  of  the  Indians  within  our  borders  who  hold  in  the 
aggregate  a  great  acreage  of  lands — and  many  of  the  best 
lands  in  the  state — do  pay  any  taxes  whatever  and  it  does  not 
seem  to  us  probable  that  they  ever  will.  The  area  of  National 
Forests  amounting  still  to  over  eight  million  acres  does  not 
contribute  directly  to  the  support  of  the  state  government  ex- 
cept as  to  that  proportion  of  the  income  from  timber  earnings 
which  is  paid  into  the  state  and  distributed  to  the  19  counties 
in  Avhich  the  forests  are  located.  In  these  counties  the  amount 
distributed  is  divided  equally  between  the  school  and  road 
funds.  The  total  paid  into  the  state  treasury  from  the  earn- 
ings of  National  Forests  in  1916  was  $35,511.33 ;  in  1917,  $77,- 


SPECIAL  REVENUE  COAfMISSION  147 

194.56;  in  1918,  $68,572.15;  in  1919,  $104,752.54;  in  1920,  $86,- 
318.16.  The  grand  total  for  tlie  five  year  period  Avas  $372,348.74. 

Governor  Larrazolo,  during  his  administration,  made  a 
great  effort  to  secure  the  cession  to  the  state  of  the  remaining 
unappropriated  government  lands  amounting  to  around  twenty 
million  acres  and  seemed  in  a  fair  way  to  succeed.  This  would, 
of  course,  have  ultimately  added  greatly  to  the  taxable  prop- 
erty here,  and  have  helped  materially  in  the  solution  of  our 
revenue  problems,  but  it  is  not  probable  that  the  matter  will 
now  be  pushed.  In  figuring  tax  producing  realty  in  New 
Mexico  we  can,  therefore,  safely  estimate  for  purposes  of  com- 
putation that  the  area  is  twenty-five  million  rather  than  seven- 
ty-eight million  of  acres. 

(Reference  to  tax  exemptions  under  the  Income  Tax  will 
be  found  in  the  article  of  the  report  on  Income  Taxation, 
pages  34-53.) 

County  Government. 

A  score  of  years  ago,  we,  in  this  country  began  to  realize 
the  inefficiency  and  expensiveness  of  the  govenment  of  our 
cities.  After  many  experiments  a  form  of  city  management  has 
been  evolved  to  solve  the  problems  of  municipalities.  In  the 
last  decade,  Ave  have  turned  our  attention  to  the  simplification 
and  co-ordination  of  state  governmental  agencies  with  a  view  to 
securing  better  service  at  less  cost  to  the  taxpayers.  We  have 
not,  however,  as  yet  given  much  study  to  the  form  and  effi- 
ciency of  county  government.  It  is  time,  Ave  believe,  to  bring 
this  department  of  public  business  under  our  consideration. 

Our  county  government  is  made  up  of  three  commissioners, 
a  sheriff,  a  clerk,  a  treasurer,  an  assessor,  a  county  superinten- 
dent of  schools,  a  probate  judge  and  a  surveyor,  all  elective. 
Among  these  officials  there  is  very  little  intelligent  co-operation 
in  the  majority  of  the  counties  of  the  state.  There  is  divided  re- 
sponsibility both  in  the  enforcement  of  laAv  and  in  the  adminis- 
tration of  public  business.  It  is  true  that  the  board  of  county 
commissioners  exercises  a  loose  sort  of  executive  control  and 
that  in  certain  counties  Avhere  strong  men  ha\'e  been  elected  as 
commissioners,  more  or  less  rigid  supervision  exists.  This  fact 
only  emphasizes  the  necessity  of  insuring  a  simplification  and 
co-ordination  of  the  agencies  of  county  government.  In  certain 
counties  the  county  clerk  has  a  comprehensive  knoAvledge  of 
affairs  and  is  able  to  adA'ise  the  comtnissioners  as  to  the  finan- 
cial affairs.  Such  a  clerk  is  of  the  greatest  assistance  in  se- 
curing efficient  service  economically  Avhen  the  board  of  com- 
missioners are  business-like  in  their  methods. 

Under  the  system  of  electing  officials,  ten  men  are  nomi- 
nated for  county  offices  by  each  party,  being  cho.sen  in  the 


148  REPORT  OF  THE  NEW  MEXICO 

great  majority  of  instances  not  because  of  competency  and  abil- 
ity adapted  to  their  duties,  but  because  of  their  vote-pulling 
power.  The  short  terms  make  it  impossible  for  even  such  men 
as  are  willing  to  perform  the  functions  of  their  offices  to  be- 
come familiar  with  their  duties  or  to  improve  their  methods 
of  administration.  The  result  is  that  county  government  is 
conducted  at  a  staggering  aggregate  of  expenditures  in  our 
twenty-nine  counties  with  an  entirely  inadequate  return  to  citi- 
zens and  taxpayers  of  seiwice.  Is  it  not  time  to  see  if  this  con- 
dition of  affairs  can  be  remedied. 

In  Appendix  XVII  to  this  report  will  be  found  detailed 
statements  as  to  county  costs.  For  the  years  1915  to  1919  the 
total  county  payments  were  respectively  as  follows: 

1915 $4,961,336.75 

1916 5,261,753.34 

1917 5,808,276.45 

1918 7,254,006.70 

1919 7,792,637.00 

Deducting  payments  to  the  state  and  to  cities,  towns  and 
villages,  we  have  as  payments  for  county  purposes  for  the  same 
years  the  following: 

1915 $3,702,716.45 

1916 3,844,309.79 

1917 4,358,169.65 

1918 5,344,866.78 

1919 5,370,128.31 

Included  in  these  amounts  are  payments  for  school  main- 
tenance which  showed  an  increase  of  from  $1,521,744.96  in  1915 
to  $2,877,444.37  in  1919;  payments  for  roads  and  bridges  in- 
creasing from  $424,893.50  in  1915  to  $808,476.16  in  1919;  in- 
terest and  principal  payments  on  bonded  debts  increasing  from 
$182„557.58  in  1915  to  $236,410.56  in  1919;  and  payments  for 
courts  which  show  a  decrease  from  $182,994.95  in  1915  to 
$180,187.55  in  1919. 

Deducting  the  foregoing  items  and  payments  from  tax 
redemption  funds,  Ave  find  that  other  county  expenditures  for 
the  years  1915  to  1919  Avere  as  follows: 

1915 $1 ,379.798.1 3 

1916 :....  1,056.190.32 

1917 1 ,1 28.363.6 1 

1918 1,286,948.80 

1919 1,257,803.62 


SPECIAL  REVENUE  COMMISSIOIN  149 

These  figures  include  payments  from  salary  funds  whicli 
average  approximately  $525,000  annually.  Other  county  ex- 
penditures including  wild  animal  bounties,  agricultural  agents' 
salaries  and  expenses,  court  house  and  jail  repairs,  indigency 
and  general  county  expenses,  show  an  average  of  about 
$700,000  annually. 

The  expenditures  for  purposes  mentioned  in  the  preced- 
ing paragraph  do  not  vary  grealty  from  year  to  year  chiefly 
because  of  the  five  mill  and  the  five  per  cent  limitations  upon 
tax  levies.  Were  it  not  for  these  limitations,  fixed  by  the  legis- 
lature, the  figures  would  undoubtedly  show^  considerable  in- 
creases. It  is  among  these  items,  however,  that  we  find  it 
necessary  to  point  out  the  opportunities  for  eliminating  waste. 

The  handling  of  the  predatory  animal  problem  is  one  in- 
volving considerable  cost  to  the  ordinary  taxpayer.  The  aver- 
age annual  payments  are  approximately  $50,000  a  year  and  yet 
many  counties  are  in  arrears  in  the  payment  of  bounties.  In 
one  county  such  arrearage  amounts  to  $25,000.  Because  of  the 
fact  that  county  authorities  desire  to  discourage  the  presenta- 
tion of  bounty  claims,  these  claims  are  allowed  to  run  year 
after  year.  The  result  is  that  the  claims  are  sold  at  prices 
which  enable  the  purchaser  to  hold  them  for  many  years  and 
still  receive  a  good  return  for  his  investment.  Unlike  other 
claims  against  the  counties  which  must  be  paid  out  of  the  re- 
ceipts for  the  year  in  which  such  claim  arises  'v\dld  animal 
bounties  must  eventually  be  paid  in  full. 

It  is  recommended  by  this  commission  that  the  handling 
of  the  predatory  animal  problem  be  entrusted  to  the  cattle  and 
sheep  sanitary  boards  in  co-operation  with  the  proper  federal 
agencies.  Funds  required  should,  we  believe,  be  pro\aded  from 
the  proceeds  of  a  special  levy  upon  those  interests  and  indus- 
tries which  benefit  directly  from  the  extermination  of  preda- 
tory animals. 

Elsewhere  we  have  called  attention  to  the  serious  flaws  in 
our  delinquent  tax  laws.  It  should  be  kept  in  mind  that  in 
many  counties,  the  collections  of  cost  of  advertising  for  de- 
linquency are  entirely  inadequate  to  cover  the  cost  of  publi- 
cation. Such  cost  reaches  as  high  a  figure  as  $7500  in  certain 
counties  and  in  those  counties  it  is  certain  that  delinquent  taxes 
will  not  be  fully  collected.  The  result  is  that  those  who  pay 
taxes  are  compelled  to  pay  the  excessive  publication  costs. 
An  estimate  of  $30,000  is  believed  to  be  consei-vative  as  to  the 
amount  that  must  be  paid  out  of  taxes  collected  in  addition  to 
penalty  collections.  The  remedy  is  suggested  in  the  article 
on  delinquent  taxes. 

Other  expenditures  that  seem  to  constitute  too  largo  a 
proportion  of  the  total  are  those  in  connection  with  the  office 


150  REPORT  OF  THE  NEW  MEXICO 

of  the  sheriff  in  many  counties.  It  is  probable  that  aside  from 
salaries,  the  traveling  an  other  expenses  of  the  sheriff  and  his 
deputies  will  reach  a  total  for  all  counties  of  $50,000  to  $60,000 
a  year. 

The  cost  of  publication  of  county  commissioners'  proceed- 
ings is  no  inconsiderable  item.  It  is  believed  that  the  maximum 
rates  established  by  Chapter  43,  Laws  of  1919,  are  excessive. 
Furthermore,  the  value  of  printing  these  proceedings  in  full 
including  much  routine  and  long  lists  of  payments  is  question- 
able. To  the  commission,  it  appears  that  condensed  state- 
ments, summarizing  the  acts  of  the  commissioners,  and  quar- 
terly financial  statements  properly  analyzing  the  expenditures 
would  be  of  more  practical  value  to  the  public. 

Premiums  on  county  officials'  bonds  amount  to  approxi- 
mately $15,000  annually  and  it  is  believed  that  the  cost  of 
insuring  county  property  amounts  to  an  equal  sum.  The  ques- 
tion arises  in  our  mind  whether  or  not  there  is  some  better 
method  of  handling  these  charges  so  as  to  reduce  their  burden 
upon  the  taxpayers. 

The  purchase  of  all  supplies  should,  we  believe,  be  placed 
in  the  hands  of  some  one  county  officer  who  under  our  present 
system  should  perhaps  be  the  county  clerk.  This  official  should 
be  in  constant  touch  with  the  chairman  of  the  Board  of  County 
Commissioners.  He  should  submit  detailed  statements  as  to 
the  finances  of  the  county.  He  should  be  the  purchasing  agent, 
but  should  be  limited  as  to  the  amount  for  which  he  may  enter 
into  contracts.  Yearly  budgets  should  be  required  to  be  pre- 
pared by  law  and  frequent  checks  should  be  made  between 
budget  allowances  and  expenditures.  The  Bateman  Act  should 
be  kept  in  force  to  prevent  expenditures  from  exceeding  avail- 
able funds  for  each  year.  There  is  no  real  reason  why  county 
government  should  not  be  placed  upon  a  business  basis.  To 
bring  this  about  there  should  be  a  few  elective  officers,  limited 
to  a  board  of  county  commissioners.  All  other  officers  should, 
we  believe,  be  appointive.  It  should  be  readily  admitted  that 
the  surveyor  may  be  appointed.  In  many  counties,  there  is 
little  need  for  such  an  officer  and  the  commissioners  may^well 
be  authorized  to  appoint  him.  The  county  superintendent  of 
schools  should  be  appointed  by  the  county  board  of  education, 
the  members  of  which  are  appointed  by  the  district  judge.  As 
elsewhere  recommended  in  this  report,  the  assessor  should  be 
an  appointed  official  in  the  general  taxation  scheme  of  the 
state. 

This  leaves  the  county  clerk,  the  county  treasurer,  the 
sheriff  and  the  probate  judge.  The  clerk  and  treasurer  should 
be  appointed  by  the  board  of  county  commissioners,  the  clerk 
being  made  the  board's  representative  in  the  business  manage- 


SPECIAL  REVENUE  COMMISSION  151 

ment  of  the  county.  We  believe  the  sheriff  should  be  appoint- 
ed by  the  district  judge  and  should  be  responsible  to  him,  his 
salary  and  expenses  being  paid  out  of  the  court  fund.  Each 
cotmty  should  have  a  district  court  clerk  appointed  by  the 
judge  of  the  district  court.  Such  clerk  should  also  be  entrusted 
with  the  duties  now  devolving  upon  the  probate  judge  and  he 
should  be  responsible  to  the  judge  of  the  court.  All  officials 
elective  and  appointive  should  be  subject  to  supervision  and 
annual  check  by  a  state  official  with  adequate  power. 

While  this  scheme  may  appear  ncAv  and  strange,  Ave  believe, 
that  careful  consideration  thereof  will  reveal  its  practicability, 
as  Avell  as  its  advantages.  Responsibility  will  be  fixed  both 
for  the  enforcement  of  law  and  the  IVLisiness  management  of  the 
county.  It  is  directly  in  line  Avith  recommendations  of  experts 
and  AAath  enlightened  public  opinion. 

Whether  any  of  the  foregoing  suggested  changes  are 
brought  about  or  not,  the  commission  unanimously  recommends 
that  the  terms  of  county  officials  as  Avell  as  those  of  the  state 
officials,  be  made  four  years  instead  of  tAvo  years.  There  Avas 
no  adequate  reason  in  either  case  Avhy  the  terms  originally 
prescribed  by  the  constitution  should  have  been  changed. 

The  Grand  Jury  System  in  New  Mexico. 

Under  the  constitution  of  the  State  of  Ncav  Mexico  "no 
person  shall  be  held  to  ansAver  for  a  capital,  felonious  or  in- 
famous crime  unless  on  a  presentment  or  indictment  of  a 
grand  jury,  except  in  cases  arising  in  the  militia  AA'hen  in  actual 
servace  in  time  of  Avar  or  public  danger."  (Ncav  Mexico  Consti- 
tution, Article  II,  Sec.  14.) 

The  above  provision  of  the  constitution  is  exclusive  except 
where  the  defendant  haAdng  been  held  by  a  committing  magis- 
trate elects  in  open  court,  Avith  the  consent  of  the  court  and 
district  attorney,  to  Avaive  the  presentment  of  an  indictment, 
and  pleads  to  an  information  in  the  form  of  an  indictment  filed 
by  the  district  attorney.  (Ncav  Mexico  Constitution,  Article 
XX,  Section  20.) 

An  examination  of  the  constitution  and  statutes  of  a  num- 
ber of  Avestern  states  discloses  the  fact  that  the  system  of  com- 
pulsory grand  juries  and  prosecution  for  crime  only  after  in- 
dictment by  a  grand  jury,  has  been  done  aAvay  Avith. 

Under  the  system  prevailing  in  Ncav  Mexico  a  grand  jury 
consists  of  tAventy-one  members  Avho  are  paid  $3.00  a  day  and 
mileage  at  the  rate  of  five  cents  per  mile.  In  addition  to  this 
all  Avitnesses  called  before  the  grand  jury  are  paid  witness 
fees  and  mileage.  The  result  is  that  the  majority  of  Avitnesses 
are  required  to  attend  at  least  twice  in  each  case;  once  before 
the  grand  jury  for  Avhich  they  are  paid  both  tlicir  per  diem 


152  REPORT  OF  THE  NEW  MEXICO 

and  mileage ;  later  on  when  the  ease  is  actually  called  for  trial 
they  are  again  subpoened  and  are  paid  a  second  per  diem  and 
mileage. 

The  system  of  compulsory  grand  juries,  as  nearly  as  can  be 
determined  without  an  accurate  check  and  audit  of  court  ex- 
penditures, accounts  for  nearly  half  of  the  court  fund  in 
many  of  the  counties,  and  in  the  opinion  of  the  Commission 
is  an  unnecessary  expenditure  of  public  funds.  The  Commis- 
sion is  of  the  opinion  that  the  time  has  now  arrived  when,  ex- 
cept in  cases  of  emergency,  prosecution  for  crime  within  the 
state  of  New  Mexico  can  be  had  upon  a  verified  information 
filed  by  the  district  attorney  instead  of  upon  formal  indictment 
returned  by  the  grand  jury.  The  experience  of  the  state  of 
Kansas  with  such  a  system  indicates  that  the  system  of  prose- 
cution of  information  instead  of  indictment  will  practically  do 
away  with  the  calling  of  any  grand  juries. 

To  accomplish  the  change  in  New  Mexico  will  require 
a  constitutional  amendment  as  a  condition  precedent  to  any 
amendments  of  the  statute  law  itself.  The  sections  of  the  con- 
stitution requiring  amendment  are  two.  Section  14  of  Article 
II  will  have  to  be  amended  by  striking  out  the  first  sentence 
of  the  same.  If  this  is  done  and  the  proper  change  is  made 
in  the  statute  law,  Section  20  of  Article  XX  of  the  constitu- 
tion would  become  useless,  and  should  also  be  stricken  out. 

If  such  constitutional  amendments  be  submitted  to  the 
people  by  the  coming  session  of  the  legislature,  the  legislature 
should  also  revise  Sections  3108  to  3144  of  the  New  Mexico 
Code  of  1915,  so  as  to  provide  machinery  for  prosecutions  upon 
information,  and  further  to  provide  for  the  calling  of  grand 
juries  in  emergencies.  Such  provisions  could  be  made  as  would 
place  the  calling  of  a  grand  jury  in  the  discretion  of  the  trial 
judge ;  or  the  calling  of  a  grand  jury  could  be  made  contingent 
upon  petition  by  a  definite  number  of  taxpayers.  Such  pro- 
visions would  amply  protect  the  public  in  the  case  of  corrup- 
tion or  malfeasance  in  office. 

Any  such  amendments  or  changes  in  the  statute  law  would 
of  course  have  to  be  made  effective,  contingent  upon  the  ap- 
proval of  the  constitutional  amendments  by  the  people  of  the 
state. 

In  addition  to  the  changes  in  the  statute  law  above  sug- 
gested, certain  other  sections  of  the  Code  would  have  to  be 
amended  to  meet  the  changed  conditions  which  would  resuJt 
upon  the  adoption  of  such  constitutional  amendments. 

In  making  the  necessary  statutory  changes  the  Commission 
would  suggest  that  the  legislature  as  a  model  therefor  take 
the  statutes  of  some  one  of  the  western  states  where  the  system 
of  prosecution  by  information  has  been  in  effect  for  a  number 


SPECIAL  REVENUE  COMiMISSION  153 

of  years.  By  so  doing  the  courts  have  the  advantage  not  only 
of  a  thoroughly  tried  system,  but  also  of  the  construction 
placed  upon  the  laws  by  the  courts  of  that  state. 

Cities,  Towns  and  Villages. 

There  are  in  New  Mexico  about  forty-five  incorporated 
cities,  towns  and  villages.  Eight  of  these  are  cities,  the  others 
being  incorporated  as  towns  or  villages.  These  different  in- 
corporations, however,  are  not  very  clearly  differentiated  in 
the  statutes  and  the  commission  believes  that  the  law  relating 
to  such  municipalities  should  be  revised  so  as  to  show  the 
classification  cleary.  Such  classification  is  necessary  if  any 
attempt  is  to  be  made  to  indicate  the  powers  which  such  muni- 
cipalities should  possess,  especially  with  reference  to  contract- 
ing obligations. 

A  survey  of  the  finances  of  a  score  of  cities,  towns  and 
villages  indicates  a  great  need  for  state  supervision  of  the 
accounting  system.  It  has  been  suggested  by  several  mayors 
that  the  cities,  towns  and  villages  should  be  placed  under  the 
same  supervision  as  that  now  exercised  over  counties  with  a 
view  of  securing  uniformity  of  accounting  methods  within 
each  class  of  municipalities.  The  limits  upon  expenditures 
should  so  vary  according  to  the  class  to  which  a  municipality 
belongs.  It  is  found  that  many  small  municipalities  have  un- 
dertaken obligations  which  it  is  impossible  for  them  to  meet. 
This  applies  especially  to  the  establishment  of  plants  for  sup- 
plying water  and  light.  Bond  issue  after  bond  issue  has  been 
made  involving  high  interest  and  sinking  fund  levies,  and  in 
several  cases  the  plants  for  which  bonds  were  issued  have 
broken  down  entirely  leaving  the  municipalities  with  a  bur- 
den Avhich  it  finds  the  greastest  difficulty  in  carrying.  It  seems 
almost  impossible  in  some  of  these  municipalities  to  secure  of- 
ficials who  have  any  accounting  ability  or  experience.  In  some 
cases  few  records  are  kept  and  an  audit  in  some  towns  has 
been  found  to  be  practically  impossible. 

These  considerations,  we  believe,  are  sufficient  to  justify 
the  commission  in  making  the  recommendation  that  the  state 
should  exercise  supervision  over  cities,  towns  and  villages  in 
the  same  manner  that  it  does  over  counties. 

The  cost  of  government  in  cities,  to^^^ls  and  villages  more 
than  doubled  in  the  first  five  years  and  it  is  necessary,  we 
believe,  in  order  to  secure  the  best  results  for  expenditures  to 
have  the  municipalities  submit  budgets  to- the  State  Tax  Com- 
mission in  such  detail  as  may  be  required.  The  same  control 
should  be  exercised  as  in  the  case  of  couijties. 

The  handling  of  the  revenues  of  munici])ally  o'v\Tied  water 
and  light  plants  constitutes  a  problem  that  has  not  yet  been 


151  REPORT  OF  THE  NEW  MVXICO 

solved  It  is  felt  thai  a  careful  study  should  be  made  of  the 
situation  and  the  earnings  of  such  plants  so  guarded  that  they 
will  apply  to  the  maintenance  and  extension  of  such  plants, 
and  to  the  payment  of  interest  and  sinking  obligations.  The 
surplus  in  such  earnings  should  be  placed  in  the  sinking  fund. 
Under  the  present  statutes  it  is  required  that  levies  should  be 
made  for  interest  and  payment  of  principal  on  bond  issues,  and 
the  practice  seems  to  be  to  levy  for  interest  and  sinking  fund 
payments  using  earnings  which  should  be  devoted  to  these  pur- 
poses to  apply  to  the  general  city  expenses.  This  constitutes 
another  reason  for  bringing  the  municipalities  under  state 
supervision  and  for  revising  the  laAvs  under  which  indebted- 
ness for  establishing  water  and  light  plants  is  incurred. 

It  may  be  that  municipalities  of  a  certain  class  \vill  need 
more  revenue  than  can  be  secured  under  the  maximum  levy 
of  five  mills  for  general  city  purposes.  The  commission  recom- 
mends that  instead  of  raising  the  maximum  limit  by  law,  an 
increase  should  be  permissable  not  to  exceed  a  certain  amount 
only  after  the  taxpaying  voters  have  approved  of  the  increase. 

In  order  to  secure  uniformity,  it  is  believed  that  restric- 
tions placed  upon  incorporated  cities,  towns  and  villages  should 
vary  according  to  classification  and  should  apply  equally  to 
ctiies,  toAvns  and  villages  operating  as  municipalities  under 
general  or  special  charters. 

State  Drainage  Taxes. 

One  of  the  most  important  recent  developments  in  many 
agricultural  sections  of  the  state  has  been  co-operative  drain- 
age projects.  Such  development,  however,  is  merely  in  its  in- 
fancy. In  the  lower  Pecos  Valley  there  are  six  districts  bonded 
in  all  for  upwards  of  a  million  dollars:  In  the  Mesilla  Valley 
there  are  several  districts  and  some  have  recently  been  formed 
in  the  vicinity  of  Albuquerque.  The  Rio  Grande  Valley  from 
Bernalillo  to  San  Marcial  must,  if  it  maintains  any  appreciable 
productivity,  be  drained  in  the  not  distant  future  and  at  great 
cost. 

The  construction  and  maintenance  of  these  drainage  sys- 
tems is  a  heavy  charge  on  the  lands  affected.  Most  of  the  dis- 
tricts have  been  formed  under  the  provisions  of  Chapter  31 
of  the  Compiled  Laws  of  1915,  (as  amended  by  Chapter  156 
of  the  Laws  of  1919)  and  some  under  Chapter  22,  of  the  Laws 
of  1917. 

Experience  has  proven  that  the  former  laws  should  be 
amended  or  strengthened  in  several  respects,  but  a  careful 
inquiry  by  competent  authorities  should  be  made  before  any 
such  amendments  are  adopted. 

At  present  the  district  judge  is  really  the  administrative 
head  of  the  drainage  district,  as  he  must  check  and  supervise 


SPECIAL  REVENUE  COMMISSION  155 

the  work  of  the  district  commissioners.  This  is  not  a  desireable 
situation  from  the  judge's  standpoint.  He  should  not  be  forced 
ex-officio  into  what  amounts  to  an  executive  administrator- 
ship as  he  has  neither  the  time  nor  the  inclination  for  such 
work.    It  has  already  led  to  various  unfortunate  complications. 

The  law  requires  that  the  treasurer  of  the  district  shall 
collect  all  principal,  interest  and  maintenance  assessment,  up 
to  the  time  they  become  delinquent,  whereupon  their  collection 
with  approved  penalties  is  turned  into  the  county  treasurer 
who  merges  the  drainage  tax  with  other  state,  county,  district 
and  municipal  taxes.  It  is  extremely  difficult  to  avoid  con- 
fusion between  the  drainage  district  and  county  books.  If  the 
present  system  is  continued  the  county  treasurer  should  be  re- 
quired to  keep  separate  drainage  delinquent  books  for  each 
drainage  district  within  the  county.  The  initial  organization 
of  the  district  can  only  be  effected  under  the  law  with  a  con- 
sent of  a  majority  of  the  land  owners  who  determine  upon  the 
amount. of  the  proposed  indebtedness  on  the  basis  of  the  bene- 
fits to  be  received,  but  additional  assessments  to  any  amount 
can  be  made  by  the  commissioners  alone  Avith  the  approval 
of  the  judge  quite  irrespective  of  whether  or  not  all  lands  in 
the  project  are  to  be  benefited.  This  should  in  some  way  be 
amended  so  that  some  referendum  can  be  had  by  the  land 
owners  in  the  district.  As  it  is,  the  land  owners  in  a  district 
who  have  received  no  benefits  whatever  from  the  expenditure 
of  the  district  funds,  and  have  no  prospect  of  receiving  any 
because  the  funds  are  all  exhausted,  are  indefinitely  assessed 
on  their  original  assessments  and  on  additional  assessments  and 
the  cloud  perpetuated  on  the  titles  to  their  land  because  of  the 
lien  of  the  mortgage  held  by  the  owners  of  the  bonds.  This 
is  wrong  and  some  means  should  be  devised  whereby  those 
who  have  received  no  benefits  can  be  released  from  their  obli- 
gations under  the  district  organization. 

There  is  apparently  no  way  for  a  district  or  perhaps  for 
the  state  to  enforce  collections  and  assessments  against  even 
such  land  owners  under  a  district  as  have  been  fully  benefited 
and  if  possible  some  method  for  bringing  about  such  enforce- 
ment should  be  defined  in  the  law. 

The  nature  of  the  lien  created  by  the  district  organization 
against  the  land  and  land  owners,  is  vague  and  indefinite  and 
should  be  more  clearly  defined.  This  and  other  considera- 
tions make  a  careful  revision  of  tlic  ]n\v  impoi-ative. 

Firemen's  Volunteer  Associations. 

The  legislature  of  1909  appropriated  $2000  annually  to  be 
paid  to  the  New  Mexico  Association  of  l-'ireinen  to  be  added 
to  a  benefit  fund  for  disabled  firrmen,  their  widows  and  or- 


156  REPORT  OF  THE  NEW  MEXICO 

phans.  This  appropriation  was  paid  out  of  the  money  col- 
lected from  insurance  companies.  This  appropriation  has  been 
discontinued. 

The  same  legislature  provided  also  for  appropriations  vary- 
ing from  $500  to  $2250,  the  total  amount  being  $12,750,  to 
seventeen  different  incorporated  cities,  towns  and  villages. 
In  1915,  a  new  act  appropriated  $14,950  to  twenty-one  cities, 
towns  and  villages  in  amounts  from  $300  to  $2,250.  By  Chap- 
ter 175,  Laws  of  1919,  appropriations  were  made  in  amounts 
from  $300  to  $2,250  to  twenty-seven  different  cities,  towns  and 
villages,  the  total  amount  being  $17,250.  The  appropriations 
are  payable  to  the  treasurers  of  the  fire  departments  of  incor- 
porated cities,  towns  and  villages,  "to  be  used  for  the  sole 
benefit  of  said  association  within  the  objects  of  their  organi- 
zation, such  payment  to  be  made  from  the  money  collected 
from  fire  insurance  companies." 

It  is  felt  by  this  commission  that  these  grants  should  be 
discontinued  and  that  the  several  municipalities  should  provide 
the  funds  necessary  for  this  purpose  from  the  proceeds  of 
the  levies  for  city  purposes. 

State  Boundary  Suits. 

In  1912,  an  appropriation  of  $2500  was  made  to  cover  costs 
of  investigation  and  suits  as  to  the  disputed  boundary  between 
the  states  of  New  Mexico  and  Texas.  The  then  Attorney-Gen- 
eral, Honorable  F.  W.  Clancy,  had  charge  of  these  investiga- 
tions and  suits.  The  legislature  of  1913  appropriated  $7500 
for  the  same  purpose.  By  Chapter  94,  Laws  of  1915,  an  appro- 
priation was  made  of  $9,2000  for  the  same  purpose  with  the 
provision  "that  the  officers  of  the  state  shall  incur  no  further 
liabilities  in  behalf  of  the  state."  These  appropriations  covered 
expenses  incurred  for  the  investigations  conducted  by  the  At- 
torney-General 's  office. 

The  legislature  of  1917  by  Chapter  111  created  the  State 
Boundary  Commission  to  bring  about  a  settlement  of  boundary 
disputes  between  New  Mexico  and  the  states  of  Texas  and 
Colorado.  The  act  appropriated  $35,000.  In  1919  the  legisla- 
ture appropriated  $7500  for  the  same  purposes.  The  investi- 
gations have  been  directed  and  the  suits  prosecuted  by  Mr.  F. 
W.  Clancy,  expenditures  having  been  made  to  the  amount  of 
approximately  $27,500.  The  balance  remaining  of  these  appro- 
priations is  a  little  less  than  $15,000. 

The  record  of  the  Texas  boundary  dispute  has  been  secured 
and  printed  in  six  large  volumes  with  a  total  of  3400  pages 
and  a  great  quantity  of  exhibits.  Mr.  Clancy  is  just  complet- 
ing a  brief  of  the  case  which  when  printed  will  make  another 


SPECIAL  REVENUE  COMMISSION  157 

large  volume.  It  is  stated  that  the  balance  of  $15,000  will  more 
than  cover  the  remaining  costs  of  this  case. 

The  Colorado  case  is  only  in  its  preliminary  stages.  A 
bill  of  complaint  having  been  filed  by  Mr.  Clancy,  which  makes 
a  volume  of  300  j)ages  including  field  notes  of  a  survey  of  the 
line.  What  the  total  cost  of  this  case  will  be  cannot  be 
estimated. 

The  Special  Revenue  Commission  has  no  recommendation 
to  make  with  reference  to  this  matter  and  makes  the  foregoing 
statement  only  for  the  purposes  of  setting  the  facts  briefly 
before  the  Governor  and  the  legislature. 

Untaxable  Lands. 

In  view  of  the  efforts  made  by  Governor  Larrazolo  to  se- 
cure the  cession  to  the  state  of  all  or  a  large  part  of  the  public 
domain  within  New  Mexico,  the  follomng  figures  will  be  of  in- 
terest. 

The  area  of  New  Mexico  is  122,634  square  miles  of  which 
131  square  miles  must  be  deducted  for  water  courses,  leaving 
a  land  area  of  122,503  square  miles,  or  78,401,920  acres. 

The  vacant  public  domain  unreserved  and  unappropriated 
on  July  1,  1919,  was  18,785,723  acres.  This  land  is,  of  course, 
not  taxed,  being  property  of  the  United  States.  In  addition 
during  the  past  five  years,  9,002,634  acres  have  been  filed 
upon  but  probably  not  yet  patented  and  therefore  not  taxable. 
Of  the  vacant  public  domain  of  18,785,723  acres,  there  are 
4,752,575  acres  still  unsurveyed. 

The  total  acreage  within  National  Forests  is  9,486,806  of 
Avhich  8,294,222  acres  belong  to  the  government,  the  remainder 
being  apparently  in  private  ownership  or  reserved  for  some 
other  purposes.  Indian  reservations  cover  4,543,692  acres  and 
National  Monuments  23,000  acres.  It  will  thus  be  seen  that 
31,646,637  acres  constitute  the  federal  government's  public  do 
main  and  reservations.  To  this  amount  we  may  add  9,002,634 
acres  of  public  domain  filed  upon  but  not  patented,  bringing 
the  total  acreage  exempt  from  taxation  up  to  40,649,271. 

The  estate  received  in  various  grants  from  the  Fod(>raI 
Government  12,406,027  acres  of  which  2,634,664  acres  have 
been  sold  to  individuals,  leaving  9,771,363  acres  still  in  the 
ownership  of  the  state  and  not  subject  to  taxation.  With  this 
amount  added,  we  have  a  grand  total  of  50,420,634  acres  which 
the  state  may  not  tax.  The  land  purchased  from  the  state 
and  taxed  at  40  per  cent  of  its  purchase  price  amounts  to 
2,517,392  acres.  Thus  we  arrive  at  an  estimate  of  Ihe  acreage 
which  should  be  upon  the  tax  rolls  of  25,463,894.  As  a  matter 
of  fact  we  find  upon  the  tax  rolls  for  1919  a  total  of  approxi- 
mately 22,500,000  acres.     Apparently,  therefore,  about  3,000,- 


158  REPORT  OF  THE  NEW  MEXICO 

000  acres  are  not  occounted  I'oi-.  To  show  the  situation  by 
counties  the  following  figures  are  submitted,  though  they  are 
in  many  cases  onh'  estinuites: 

Counties  Approximate  Area         Acres  on  Tax  Rolls 

in  Acres  (1919) 

Bernalillo 776,960  319,369 

Chaves  4,124,160  729,559 

Colfax 2,430,720  1,988,347 

Curry  899,840  783,897 

Dona  Ana  2,445,440  223,629 

DeBaca 1,497,640  351,439 

Eddy  2,651,520  285,536 

Grant  ../ 2,611,200  228,653 

Guadalupe 2,551,680  792,932 

Hidalgo  2,142,720  Included  wath  Grant 

Lea  2,860,800  752,833 

Lincoln  3,058,560  232,022 

Luna 1,904,640  261,948 

:\rcKinlev 3,523,840  1,249,286 

Mora 1,645,440  1,114,014 

Otero 4,280,960  281,523 

Quay 1,859,200  1,193,304 

Rio  Arriba  3,757,440  928,519 

Roosevelt 1,594,680  993,147 

Sandoval  2,477,440  793,152 

San  Juan  3,504,640  286,572 

San  :\rigucl  3,070,720  2.004,127 

Santa  Fe  1,262,720  578,690 

Sierra  .'. 1,995,520  293,415 

Socorro 9,644,800  1.133,277 

Taos  1,441,280  552.765 

Torrance  2,156,160  558,119 

Union  3,436,800  2,049,061 

Valencia 3,621,760  1,652,351 


Total 79,229,280  22,611,486 

An  effort  to  varify  these  figures  by  information  obtained 
from  county  assessors  brought  replies  fi'om  four  counties  only, 
Colfax,  Dona  Ana,  Torrance  and  Quay.  The  questions  asked 
were  such  as  should  have  been  readily  answered  if  assessors 
had  any  sort  of  a  check  on  lands  within  their  respective  coun- 
ties. There  is  here  found,  inidoubtedly,  a  serious  defect  in  our 
taxation  system  in  that  it  is  impossible  to  secure  exact  infor- 
mation as  to  lands  not  upon  the  tax  rolls.  We  are  unable  to 
account  for  3,000.000  aores.     Perhaps  there  are  government 


SPECIAL  REVENUE  COMMISSION  159 

withdrawals,  Indian  allotments,  military  reservations,  rights- 
of-way,  city  and  town  sites,  or  other  tracts  exempt  for  some 
reason  or  another  that  are  a  part  of  this  acreage,  but  we  have 
no  definite  information  nor  is  tliere  any  method  for  securing 
such  information  except  in  a  comparatively  .few  counties.  Un- 
der a  centralized  system  of  administration,  such  as  this  com- 
mission recommends,  it  will  be  possible  to  secure  the  installa- 
tion of  adequate  land  checks  in  all  counties.  It  may  be  found 
necessary  to  provide  for  surveys  through  co-operation  between 
the  state  and  the  various  counties  in  order  to  determine  the 
exact  situation.  .Two  of  the  state  departments,  the  State  Tax 
Commission  and  the  Commissioner  of  Public  Lands,  would  be 
interested  in  such  surveys  which  would  be  primarily  necessary 
in  counties  in  which  the  large  land  grants  lie. 

Reverting  to  the  cession  of  all  or  part  of  the  public  do- 
main to  the  state,  it  may  be  found  impossible  to  induce  the 
Congress  of  the  United  States  to  agree  to  the  proposal  at  all. 
In  that  event,  certain  concessions  should  be  sought.  In  the  case 
of  Federal  Aid  for  road  constrtuction,  the  government  might 
contribute  three  dollars  for  each  dollar  contributed  by  the  state 
for  any  project.  Such  a  provision  is  incorporated  in  the  Cham- 
berlain Bill  now  in  Congress  to  aid  future  road  construction. 
Other  grants  of  Federal  aid  on  the  basis  of  co-operation  might 
be  made  on  a  more  liberal  basis  than  that  used  in  other  states 
where  the  public  domain  and  other  exempt  areas  are  negligible. 
Grants  of  land  might  be  made  to  the  state  for  certain  specified 
purposes  or  other  plans  might  be  put  into  effect  Avhereby  the 
state  should  receive  compensation  for  the  loss  of  revenue  be- 
cause of  the  large  exempt  areas. 

It  should  be  noted  that  there  is  a  small  return  to  the  state 
from  the  handling  of  public  lands,  a  payment  to  the  permanent 
common  school  fund  being  made  of  five  per  cent  of  the  pro- 
ceeds of  U.  S.  land  sales.  In  1916,  this  amounted  to  $3,155.65; 
in  1917,  $1,664.25;  in  1918,  $2,580.12;  in  1919,  $1,496.98;  in 
1920,  $1,791.54;  a  total  of  five  years  of  $10,688.54. 

In  connection  with  this  subject  the  following  data  for  the 
government  fiscal  year  ending  June  30,  1919  with  reference 
to  federal  administration  of  forests  in  New  Mexico  will  be  of 
interest : 

1.  Net  area  of  National  Forests  i)i  New  ^Mexico,  8,294,222 
acres. 

2.  Number  of  employees  in  National   Forest   Sei'vice   in 
New  Mexico,  135. 

3.  Total  expense  to  fedei'al  govenimcnl   in  administering 
the  National  Foi'ests  in  New  ^Mexico : 


160  REPORT  OF  THE  NEW  MEXICO 

Operating $200,550.12 

Improvements  35,515.71 

Protection  49,861.37 

Survey  of  Homesteads  5,455.00 

Classification  of  land .-. 3,268.00 

Range  reconnaisance  4,523.50 

Range  improvements 5,000.00— $304,173.70 

4.  Total  amount  spent  for  roads  and  trails  in  National 
Forests  in  New  Mexico  : 

Total  amount  spent  to  January 

1, 1920  (Federal  funds  only)  $279,214.07 
Total  to  be  expended,  calendar 
year  1920  (Federal  funds  only)  435,283.81— $714,497.88 

5.  Total  revenue  derived  from 
National  Forests  in  New  Mex- 
ico fiscal  year  ending  June  30, 

1919   352,794.20 

6.  Amount  paid  to  state  of  New 
Mexico  from  National  Forests 
revenue  in  New  Mexico  fiscal 
year  ending  June  30, 1919  :  Act 
including  school  sections $20,091.49 

Roads  and  schools  (25%  item)     84,661.0&— $104,752.54 

Public  Elementary  and  High  Schools. 

The  sources  of  revenues  for  the  maintenance  of  public 
elementary  and  high  schools  are  the  following :  1,  county  taxes ; 
2,  poll  taxes;  3,  one-half  merchandise  licenses;  4,  distribution 
of  the  state  current  school  fund. 

A  county  tax  of  not  to  exceed  18  mills  may  be  levied,  the 
proceeds  of  which  are  used  to  maintain  elementary  and  high 
schools  in  the  rural  and  municipal  districts  of  the  county.  It 
it  possible  to  increase  the  funds  available  by  establishing 
county  high  schools  by  a  vote  of  the  people.  As  much  as  two 
mills  may  be  levied  in  each  county  for  the  support  of  the 
high  schools  so  established.  In  1919  the  total  amount  levied 
by  these  rates  was  $2,680,946.18.  The  rate  for  general  county 
school  purposes,  not  including  county  high  school  levies,  varied 
from  2  mills  in  Sandoval  county  to  15  mills  in  San  Juan  county. 
County  high  schools  are  found  in  Bernalillo,  Colfax,  De  Baca, 
Eddy,  Guadalupe,  Hidalgo,  Lea,  Lincoln,  Luna,  McKinley, 
Otero,  Socorro  and  Valencia  counties. 

The  poll  taxes  collected  in  the  state  amount  to  approximate- 
ly $50,000.  Receipts  from  merchandise  licenses  are  about 
$10,000.  The  distribution  of  the  state  current  school  fund  yields 


SPECIAL  REVENUE  COMMISSION  161 

$6.00  per  capita  of  the  school  population  or  about  $725,000  for 
the  state.  Nineteen  counties  derive  together  approximately 
$35,000  from  Forest  Reserve  earnings.  Estimating  the  receipts 
from  taxes  on  the  basis  of  ninety  per  cent  collections,  and 
allowing  for  delinquent  tax  collections,  it  is  probable  that  there 
was  available  for  maintaing  schools  for  the  last  school  year 
ending  June  30,  1920,  a  total  of  $3,320,000. 

The  state  current  school  fund  is  made  up  of  the  proceeds 
of  leases  of  state  lands — grazing,  agricultural,  oil,  etc. — inter- 
est on  permanent  school  fund,  interest  on  deferred  payments 
upon  land  purchased  from  the  state  and  the  proceeds  of  a  half 
mill  state  school  tax. 

Buildings  for  school  purposes  must  be  provided  by  the 
local  districts.  This  may  be  done  cither  by  issuing  bonds  or 
by  tax  levies.  At  the  present  time  the  total  amount  of  out- 
standing bonds  issued  for  constructing  school  houses  exceeds 
$3,500,000.  Special  school  district  levies  must  be  made  to  pro- 
vide for  payment  of  interest  and  principal  of  these  bonds. 
Special  levies  may  be  made  for  purchasing  sites,  purchas- 
ing or  building  school  houses,  providing  first  equipment  and 
for  interest  and  principal  payments  upon  bonded  indebtedness. 
In  1919  a  total  of  $427,012.97  was  levied  for  these  purposes  in 
all  rural  and  municipal  school  districts  in  the  state. 

Because  of  liberal  financial  provisions  made  for  its  public 
schools  by  New  Mexico,  rapid  progress  has.  been  made  in  af- 
fording educational  opportunities  to  all  the  children  of  the 
state.  The  standard  required  for  teachers  has  been  raised, 
school  buildings  have  been  constructed  in  large  numbers,  the 
attendance  has  increased,  annually  more  pupils  are  completing 
their  elementary  grades,  the  enrollment  in  high  schools  has 
grown  by  leaps  and  bounds  and  the  organization  of  the  school 
system  is  almost  a  model. 

That  New  Mexico's  educational  progress  has  been  remark- 
able is  indicated  by  a  report  issued  by  the  Russell  Sage  Foun- 
dation. According  to  this  report  New  Mexico  has  advanced 
from  47th  place  in  relative  standing  among  48  states  of  the 
Union  to  28th  place.  This  rating,  it  is  believed,  actually  does 
the  state  an  injustice,  in  that  the  basic  figures  used  for  the 
computations  were  inaccurate.  A  re-checking  on  accurule  fig- 
ures showed  that  New  Mexico  in  1918  was  entitled  to  21st 
place  among  the  states,  surpassing  29  states  including  all  Ihe 
southern  states,  many  of  the  most  important  middle  slates, 
some  of  the  wealthiest  eastern  states  and  one  western  state. 

The  factors  involved  in  determining  the  relative  ranks 
were  the  following: 


162  REPORT  OF  THE  NEW  MEXICO 

1.  Days  attended  by  each  child  of  school  age. 

2.  Days  schools  were  kept  open. 

3.  Proportion  of  children  in  high  school. 

4.  Percentage  of  boys  to  girls  in  high  schools. 

5.  Expenditures  per  child  attending  school. 

6.  Expenditures  per  child  of  school  age. 

7.  Expenditures  per  teacher  employed. 

8.  Expenditures  for  non-salary  purposes. 

9.  Average  salary  per  teacher  employed. 

10.     Per  cent  of  children  of  school  age  attending. 

From  a  study  of  statistics  compiled  by  the  U.  S.  Bureau  of 
Education,  it  may  be  seen  that  New  Mexico  ranks  well  in 
educational  advancement  with  other  states  of  the  Union,  and 
surpasses  the  most  of  them,  when  the  state's  wealth  and  re- 
sources are  considered.  For  the  school  year  1917-18  the  an- 
nual cost  per  pupil  enrolled  amounted  to  $45.19,  while  the 
average  for  all  the  other  states  was  $36.62.  The  annual  cost 
i:>er  ]>upil  attending  in  New  Mexico  was  $68.68,  and  in  all  the 
str.tes  the  average  was  $49.12.  The  average  daily  cost  per  pupil 
attending  in  New  Mexico  was  44  cents,  and  in  the  United  States 
31  cents.  The  daily  cost  for  maintenance  in  New  Mexico  just 
equalled  the  average  for  the  whole  country,  while  the  average 
daily  cost  for  new  buildings,  sites,  etc.,  in  New  Mexico  was 
the  highest  of  all  the  states,  nearly  four  times  the  average 
daily  cost  for  the  whole  country. 

From  reports  of  the  State  Superintendent  of  Public  In- 
sruction  we  find  that  the  total  expenditures  for  public  elemen- 
tary and  high  schools  for  the  year  ending  June  15,  1908  was 
$539,964.65;  the  outstanding  bonded  indebtedness  was  reported 
as  $320,422.84.  For  the  same  year  the  school  census  of  children 
5  to  21  years  of  age  was  93,815,  the  enrollment  43,667,  the 
average  daily  attendance  26,844.  The  number  of  teachers  em- 
ployed was  1065,  their  average  salary  being  $332.82.  The 
amount  expended  for  all  purposes  was  approximately  $12.50 
per  capita  for  children  enrolled. 

For  the  year  ending  June  15,  1910,  the  total  expenditures 
for  public  schools  were  $829,631.47.  The  teachers  employed 
Avere  1474;  school  census,  94,693;  school  enrollment,  56,304; 
and  average  daily  attendance,  37,389.  The  average  annual 
salary  per  teacher  was  $339.10.  The  amount  expended  for  all 
school  purposes  was  $14.73  per  capita  of  enrollment  and  $22.19 
per  capita  of  average  daily  attendance.  The  average  length 
of  term  was  five  and  one-third  months.  The  outstanding  bond- 
ed indebtedness  was  about  $750,000.  The  population  for  the 
state  in  that  year  was  327,301  and  the  assessed  valuation  of 
property  was  $58,313,126.     The  assessed  value  Avas,  however. 


SPECIAL  REVENUE  COMMISSION  163 

less  than  one-third  of  the  actual  value.  Estimating  the  actual 
value  of  property  at  $200,000,000,  the  cost  for  schools  was  $14 
for  each  $1000  of  assessed  value,  or  $4  for  each  $1000  of  actual 
value.     The  cost  per  capita  of  population  was  $2.54. 

For  the  year  1918-19  the  total  school  expenditures  amount- 
ed to  $2,833,992.34,  according  to  the  state  superintendent's  re- 
port. The  average  per  capita  of  total  population  was  approx- 
imately $8;  per  capita  of  school  census  $24;  per  capita  of  en- 
rollment $35 ;  per  capita  of  attendance  $54.  The  expenditures 
per  $1000  of  taxable  and  actual  wealth  was  nearly  $8,  almost 
double  that  of  1909-10.  There  were  2616  teachers  in  that  year 
and  the  average  length  of  the  school  term  was  8  and  one-half 
months;  men  teachers  received  an  average  of  $114.44  per 
month  and  women  $79.69.  In  high  schools  men  received  $1800 
per  year  and  women  $1375,  on  the  average.  The  bonded  in- 
debtedness was  reported  as  $2,193,636.46  and  the  value  of  all 
school  property  as  $5,552,206.21.  A  table  published  in 
Appendix  XXIII  shows  some  of  the  disadvantages  under 
which  New  Mexico  labors  in  its  attempts  to  solve  educational 
problems.  This  state  had  1003  children  of  the  ages  of  5  to  18 
for  each  1000  adult  males  according  to  the  1910  census ;  whereas 
for  the  western  states  as  a  whole  there  were  only  596  children 
per  1000  adult  males.  New  Mexico,  in  1912,  had  $5000  of  proper- 
ty for  each  child,  while  the  western  division  as  a  whole  had  over 
$12,000.  In  this  respect  New  Mexico  stood  below  all  other 
western  states.  The  comparatively  small  number  of  adult 
males  per  1000  children  and  the  small  amount  of  property  be- 
hind each  child  of  school  age  are  real  handicaps.  In  addition, 
the  sparseness  of  the  population  thinly  distributed  over  large 
areas  is  another  element  that  involves  larger  school  expendi- 
tures. Taking  these  considerations  into  account,  the  people  of 
the  state  may  well  feel  gratified  at  the  strides  forward  made 
in  educational  advancement. 

Remarkable  as  has  been  the  progress  of  the  school  system 
in  New  Mexico,  there  are  certain  weaknesses  to  which  atten- 
tion should  be  directed.  The  commission  believes  that 
lengthening  the  term  of  office  of  the  county  and  state  super- 
intendents of  public  instruction  is  necessary  and  the  appoint- 
ment of  these  officials  by  the  county  and  state  boards  of  edu- 
cation respectively  will  lead  to  the  perfecting  of  the  good  sys- 
tem of  supervision  which  we  now  have. 

The  most  important  factor  in  the  conduct  of  schools  is  the 
teacher,  and  the  commission  believes  that  here  is  Now  Mexico's 
greatest  problem.  Under  the  interpretation  of  our  school 
revenue  laws,  it  is  possible  to  pay  teachers  in  this  stale  salaries 
ranging  considerably  higher  than  in  most  of  the  other  states 
and  it   is  believed  that    a  supply  of  competent   teachers  will 


164  REPORT  OF  THE  NEW  'MEXICO 

eventually  be  available  undev  the  present  compensation  sched- 
ules. The  standards  of  qualiiicalioij  should  be  gradually  raised 
until  every  teacher  i)ossesses  not  only  experience  and  a  certi- 
ficate, but  a  fair  degree  of  professional  ti-aining.  This  is  the 
immediate  problem  presented  for  solution  to  our  state  board  of 
education  and  educational  instil utions.  It  is  a  mattei-  for  serious 
consideration  that  of  the  18G5  teachers  in  our  rui-al  schools  753 
taught  with  second  and  third  grade  certificates  and  permits. 
Less  than  100  of  these  teachers  held  professional  certificates, 
though  it  is  probable  that  many  of  the  938  teachers  holding 
fii'st  grade  elementary  certificates  have  pursued  professional 
studies. 

The  commission  believes  that  with  present  limitations  as 
to  school  levies,  adequate  funds  will  be  available  for  all  school 
purposes  taking  into  consideration  the  increase  in  taxable  prop- 
erty and  the  possibility  of  additional  funds  through  the  income 
tax.  With  reference  to  the  latter  it  is  recommended  that  there 
be  no  distribution  the  first  year  of  the  collection  of  the  in- 
come tax.  The  tax  collected  the  first  year  would  be  distri- 
buted as  provided  by  law  in  the  ensuing  year.  It  would  thus 
be  known  what  income  from  this  source  w^ould  be  at  the  time 
tax  levies  are  made  for  any  year. 

The  preparation  of  budgets  in  detail  for  each  school  dis- 
trict has  been  a  means  of  safeguarding  school  funds  and  con- 
tinued care  should  be  exercised  in  planning  for  each  year  to 
the  end  that  commitments  shall  not  exceed  the  funds  appro- 
priated. There  is,  the  commission  believes  a  tendency  to  spend 
money  for  purposes  that  Avere  hardly  contemplated  by  the  legis- 
lature. To  what  extent  such  expenditures  are  justified  the 
commission  is  not  in  a  position  to  state,  but  if  they  are  neces- 
sary, full  legal  sanction  should  be  secured  by  having  proper 
measures  approved  by  the  legislature. 

Reference  is  here  made  to  such  expenditures  as  those  in 
payment  of  the  salaries  of  clerk  for  county  boards  of  education, 
rural  school  supervisors,  nurses,  etc.  These  expenditures  will 
in  time  amount  to  perhaps  as  much  as  $100,000  or  even  more, 
and  it  seems  to  the  commission  that  there  should  be  a  specific 
legal  provision  if  they  are  to  be  continued.  These  are  not  the 
only  objects  of  expenditures  that  have  no  special  sanction  in 
the  laws,  and  it  is  difficult  to  believe  that  the  legislature  had 
these  objects  in  mind  as  being  "necessary  to  the  proper  con- 
duct of  the  school." 

Under  the  most  recent  interpretation  of  Ihe  law.  it  is 
possible  to  pay  teachers  with  first  grade  elementary  or  higher 
forms  of  certificate  as  much  as  $100  per  month  for' 12  months, 
second  grade  teachers  $75,  -and  third  grade  teachers  $60  per 
month.     These  limitalions  apply  only  to  7-ural  schools  of  one, 


SPECIAL  REVENUE  COMMISSION  165 

two  or  three  rooms.  In  city,  town  and  village  schools  and  in 
rural  districts  having  graded  schools  with  four  or  more  teach- 
ers there  are  no  limits.  It  is  generally  conceded  that  the  limi- 
tations as  to  teachers  with  second  and  third  grade  certificates 
permit  the  payment  of  adequate  salaries  to  these  classes.  The 
only  difficulty  then  arises  in  cases  of  teachers  having  first 
grade  elementary  or  higher  forms  of  certificates  employed  in 
one,  two  and  three  room  rural  schools.  In  many  instances 
these  teachers  are  inexperienced  or  the  schools  are  small  or 
other  considerations  exist  Avhich  do  not  justify  a  salary  of  the 
present  maximum.  In  fact  it  is  found  that  teachers  are  often 
employed  on  the  basis  of  their  certification  only,  and  are  paid 
the  highest  possible  salary  when  it  would  perhaps  be  possible 
for  them  to  work  at  a  lower  salary  because  of  conditions  men- 
tioned above.  In  making  the  foregoing  observations,  we  do 
not  mean  to  say  that  conditions  may  not  justify  the  payment 
of  more  than  a  monthly  salary  of  $100,  but  the  point  is  made 
that  care  should  be  exercised  in  paying  salaries  according  to 
the  nature  of  the  work  and  the  service  rendered. 

The  figures  for  school  attendance  are  by  no  means  what 
they  should  be.  Of  the  school  census  of  .122,000  children, 
82,000  were  enrolled  in  1918-19,  and'  the  average  daily  atten- 
dance was  only  52,000.  It  is  probable  that  few  of  the  children 
of  the  ages  of  7  to  14  are  not  provided  with  school  opportuni- 
ties. It  is  estimated  that  there  are  88,000  children  of  those 
ages  in  New  Mexico.  Several  thousand  are  enrolled  iii  other 
schools,  about  82,000  being  enrolled  in  the  public  schools  as 
stated.  Of  these  only  about  60  per  cent  are  in  average  daily 
attendance.  This  low  percentage  is  due  in  no  small  measui'c  to 
the  teachers  inability  to  "hold"  the  children  after  their  en- 
rollment and  to  his  failure  to  secure  the  co-operation  of  parents 
in  the  matter  of  school  attendance.  This  is  one  strong  argument 
against  the  employment  of  incompetent  or  indifferent  teachers. 
A  further  reason  for  the  low  attendance  figures  lies  in  the  fact 
that  in  many  parts  of  the  state  children  are  kept  out  by  their 
parents  to  work  in  the  fall  or  are  taken  out  early  in  the  spring. 
In  fact  local  conditions  may  sometimes  be  such  as  to  suggest 
the  limiting  of  the  tei'm  to  seven  months.  There  are  other 
causes  of  course  for  low  attendance,  but  it  will  ]iro])al)ly  be 
found  that  capable,  enthusiastic  teachers  ^ill  do  more  than 
anythijig  else  to  improve  these  conditions. 

The  fact  should  be  noted  that  all  high  schools  are  county 
high  schools,  in  the  sense  lliat  Ihey  are  su])i)()rted  by  counly 
levies.  All  high  schools  have  the  courses  prescribed  for  "Coun- 
ty High  Schools".  It  would  be  a  simple  matter  therefore  to 
provide  that  all  high  schools  should  be  open  to  all  pupils  who 
have  satisfactorily  completed  the  eighth  grade.     If  this  were 


166  RKPORT  OF  THE  NEW  MEXICO 

done  there  would  be  no  necessity  for  the  establishment  of 
special  "ceiinty  high  schools",  and  no  necessity  for  a  special 
levy  so  long  as  the  county  school  budgets  for  all  elementary 
and  high  schools  do  not  call  for  more  funds  than  can  be  raised 
■within  the  present  18  mills  limitation. 

Special  school  district  levies,  as  has  been  said,  may  be 
made  not  to  exceed  five  mills  in  all  except  for  interest  and  sink- 
ing funds.  In  making  these  levies  where  needed  county  author- 
ities should  see  to  it  that  a  special  levy  for  interest  and  at  the 
proper  time,  a  sinking  fund  levy  for  each  of  the  bond  issues 
made  by  the  district  are  made.  If  funds  are  needed  for  pur- 
chase of  site,  purchase  or  construction  of  school  house,  or 
purchase  of  first  equipment  a  special  levy  should  be  made  to 
meet  the  actual  needs,  and  the  proceeds  of  all  levies  should 
be  made  for  such  purposes  to  be  handled  in  the  accounts  for 
purposes  for  which  they  were  intended. 

The  matter  of  the  distribution  of  the  state  current  school 
fund  is  one  requiring  attention.  The  constitution  provides 
for  the  distribution  of  this  fund  on  a  per  capita  school  census 
basis.  Such  a  basis  is  not  satisfactory.  If  all  the  funds  avail- 
able for  school  pui*poses  were  so  distributed  it  might  have  some 
justification,  but  even  then  educational  opportunities  would 
not  be  fully  equalized.  Another  objection  to  the  per  capita 
of  census  basis  is  that  the  school  census  is  far  from  accurate  in 
many  counties.  For  instance,  one  county  has  a  population  of 
15,030  in  1920  and  the  school  census  is  8648.  (See  table  of  com- 
parison for  all  counties.  Appendix  XXXVIII. 

A  better  method  of  distribution  would  be  in  part  upon  a 
teacher  basis  and  in  part  upon  an  attendance  basis.  The  teach- 
er's salary  is  the  largest  item  of  expense  and  the  needs  of  the 
school  are  largely  determined  by  the  amount  required  for 
teachers.  If  a  part  of  the  state  school  fund  is  distributed  on 
a  per  teacher  basis,  the  remainder  should  be  distributed  on  an 
attendance  basis  in  order  to  encourage  attendance.  It  may  be 
that  a  constitutional  amendment  to  establish  this  method  of 
distribution  for  the  state  current  school  fund  would  fail  to 
pass,  but  another  state  fund  could  be  established  by  the  legis- 
lature which  could  be  distributed  as  suggested.  A  school  equal- 
ization fund  might  be  established  into  which  the  proceeds  of  an 
income  tax  if  adopted  should,  in  the  opinion  of  the  commission, 
be  covered  and  such  fund  distributed  on  the  new  basis. 

The  proper  education  of  the  future  citizens  of  New  Mexico 
is  the  state's  principal  duty  and  the  commission  desires  to  have 
it  distinctly  understood  that  the  information  given  and  the 
suggestions  made  are  for  no  other  purpose  than  to  secure  the 
most  effective  system  of  public  education  that  our  wealth  and 


SPECIAL  REVENUE  COMMISSION  167 

resources  \vill  permit.  AVe  can  agree,  to  a  very  large  extent 
therefore,  with  the  recommendations  made  by  the  New  Mexico 
Educational  Association  at  its  recent  meeting  in  Albuquerque. 

(Note:    For  statutes  as  to  teachers'  salaries,  see  Appendix 

XL) 


J 


CHAPTER  IX. 

THE  BUDGET. 

BOND  CONTROL  AND  TAX  LIMITATIONS. 


Local  budgets  169 

State  budget : 170 

Administration  of  the  budget  174 

Recapitulation  175 

Tax  Limitations 176 

Bond  issufes  and  bond  control  178 


SPECIAL  REVENUE  COMMISSION  169 

CHAPTER  IX. 

THE  BUDGET. 

BOND  CONTROL  AND  TAX  LIMITATIONS. 

The  consideration  of  the  budget  as  a. part  of  the  tax  pro- 
blem of  New  Mexico  divides  naturally  into  two  parts 

(a)  The  State  Budget  proper,  and 

(b)  The  budgets  of  the  local  governmental  units —  coun- 
ties, cities,  towns,  villages  and  school  districts. 

Local  Budgets. 

Taking  up  the  local  budgets  first  the  present  state  of  the 
law  is  a  distinct  recession  from  the  conditions  which  prevailed 
from  1915  to  1919.  In  1915  the  legislature  passed  a  general 
tax  limit  law  (Chapter  74  of  the  laws  of  that  year).  Under 
this  act  all  tax  levies  passed  in  review  before  the  Tax  Commis- 
sion. As  the  law  Avas  all-inclusive,  covered  all  levies  for  all 
purposes,  it  was  essential  that  the  entire  fiscal  program  of  the 
counties,  municipalities  and  school  districts  be  made  up  care- 
fully in  advance  and  be  so  carefully  formulated  in  detail  as 
to  pass  inspection  by  the  commission.  The  Tax  Commission 
prepared  and  distributed  budget  forms  covering  all  county 
and  local  budgets  either  by  itself  or  in  collaboration  with  the 
State  Department  of  Education  and  the  State  Highway  Com- 
mission and  required  such  budgets  properly  and  fully  pre- 
pared, as  a  condition  to  its  consideration  of  local  tax  levies. 
The  proper  formulation  of  local  budgets  was,  from  1915  to  1919, 
therefore,  adequately  cared  for.  Only  by  deliberate  violation 
of  law  could  the  administration  of  such  budgets — the  spending 
of  the  money  raised  thereunder — fail  adequately  to  safeguai-d 
the  public  interest.  Instances  of  such  violations  of  law — tlic 
spending  of  more  money  than  was  appropriated — occurred,  but 
such  instances  were  not  numerous  and  could,  by  slight  addi- 
tions to  the  existing  laM's,  have  been  prevented  altogether. 
Instead,  however,  of  sti-enghtening  the  budgetary  pi-ovisions 
inherent  in  Chapter  74  subsequent  legislative  acts  substantially 
weakened  it,  especially  in  the  year  1919.  Chapter  83  of  the 
laws  of  1919  eliminated  school  tax  levies  from  the  control,  as 
provided  l)y  Chapter  74,  and  Chapter  168  of  the  laws  of  1919 
eliminated  road  taxes  levied  to  meet  Federal  aid  from  sucli 
control.  As  the  purpose  of  Chapter  74  was  1o  soeiire  a  enrcfnl 
review  of  the  entire  local  budget  and  as  the  limitation  therein 
prescribed  applied  only  to  the  budget  as  a  whole,  these  acts 
of  the  legislature,  covering  at  least  75  per  cent  of  the  budget. 


ITO  REPORT  OF  THE  NEW  MEXICO 

destroj'od  the  effectiveness  of  Chapter  74.  There  is  now,  there- 
fore, nothing  in  the  laws  of  New  Mexico  effectual  to  guaran- 
tee under  State  authority  adequate,  fully  prepared  and  care- 
fully considered  local  budgets  or  a  full  review  of  tax  levies 
before  they  become  effective. 

The  first  step  toward  an  adequate  local  budget  system 
in  New  Mexico  requires  the  restoration  of  the  substance  of 
Chapter  74  of  the  laws  of  1915.  Further  than  that  provision 
should  be  made  for  the  proper  administration  of  the  budget 
by  which  expenditures  when  made  may  be  controlled  and  lim- 
ited to  the  expenditures  authorized  by  the  budget  appropria- 
tion. Every  proper  budget  consists  of  two  parts  (a)  the 
appropriation  for  expenditure  (b)  the  pro\'ision  for  funds  to 
meet  those  appropriations.  It  always  happens  that  budgets 
either  overrun  or  underrun,  there  is  always  a  surplus  or  a 
deficit,  large  or  small  as  the  budget  was  well  or  ill  planned 
and  executed.  Obviously  spending  departments  for  which  spe- 
cific appropriations  have  been  made  have  a  right  to  assume 
that  funds  will  be  provided  and  to  act  accordingly,  else  there 
can  be  no  economical  planning  or  execution.  Conversely,  no 
matter  how  greatly  revenues  exceed  appropriations  the  spend- 
ing departments  have  no  interest  in,  nor  right,  to  the  surplus. 
It  should  remain  a  surplus  until  appropriated.  Moreover,  the 
test  of  conformity  to  a  budget  consists  not  in  the  cash  with- 
d^a"^^^l  from  the  trea.sury,  but  in  the  total  commitments  to  ex- 
penditures either  during  the  year  or  for  the  future.  No  budget 
is  completed,  therefore,  which  does  not  limit  total  commitments 
for  a  year  rather  than  total  disbursements  within  the  year. 
Adequate  machinery  should  be  provided  in  the  accounting  of- 
fices of  counties,  towns  and  cities  of  the  state  for  the  certifi- 
cation of  contracts  as  well  as  warrants  and  the  instant  charge 
of  such  contracts  against  existing  appropriations.  In  no  other 
way  can  appropriations  be  properly  protected  against  over- 
draft. Any  contract  not  so  certified  should  be  absolutely  void. 
These  changes  in  the  laAv  coupled  with  proper  supervision  of 
tax  levies  by  the  Tax  Commission  and  proper  supervision  of 
local  accounts  by  the  traveling  auditor  (  whose  authority  should 
extend  to  all  municipal  units)  should  bring  New  Mexico  to  the 
front  of  all  the  states  in  local  budget  procedure. 

State  Budget. 

New  Mexico  has  a  state  budget  and  a  state  budget  law. 
Chapters  81  and  114  of  the  Laws  of  1917  and  Chapter  174  of 
the  Laws  of  1919  provide  the  essential  machinery  for  the  pre- 
paration of  a  state  budget.  The  question  for  New  Mexico  is, 
therefore,  not  whether  a  state  budget  law  should  be  passed. 


SPECIAL  REVENUE  COMMISSION  171 

but  whether  the  existing  law  is  adequate.    New  Mexico  has  a 
budget  system,  is  it  a  good  and  complete  system? 

A  proper  discussion  of  the  above  question  requires  first  of 
all  a  definition  of  a  budget  and  an  outline  of  its  essential 
features.  A  budget  is  a  financial  program.  Under  our  form 
of  government  it  ordinarily  requires  preparation  by  the  execu- 
tive, authorization  by  the  legislature  and  administration  by  the 
executive  departments  of  the  government. 

The  preparation  of  the  budget  by  the  executive  requires 
a  full,  adequate,  careful  and  complete  survey  of  the  fiscal 
needs  and  resources  of  the  state  government  in  all  its  depart- 
ments, institutions,  and  wholly  or  partially  supported  activi- 
ties. This  survey  relates  to  the  past,  to  show  what  has  been 
done,  and  to  the  future  to  show  what  should  be  done.  This 
survey  is  not  a  mere  statement  of  estimated  needs  from  funds 
to  be  raised  by  taxation,  incomplete  and  misleading,  but  a  full 
statement  for  each  department  of  its  expenditures  for  every 
purpose,  and  receipts  from  every  source  for  at  least  the  last 
appropriation  period,  of  its  estimated  needs  for  every  purpose 
and  its  anticipated  revenues  from  every  source,  as  well  as,  its 
specific  requests  for  revenues  to  be  supplied  from  taxes  for  the 
appropriation  period  under  consideration. 

The  preparation  of  the  budget  requires  that  individual 
budget  estimates  submitted  by  departments,  institutions  and 
other  state  supported  activities  shall  be  submitted  in  the  de- 
tail above  outlined  to  the  Governor  and  shall  be  fully  consid- 
ered by  him,  that  the  public  shall  be  fully  informed  as  to  their 
contents,  purposes  and  effects,  that  all  interested  parties  shall 
be  heard  and  their  assistance  enlisted  in  the  consideration, 
support  and  criticism  of  the  estimates.  The  proposals  should 
be  summarized,  the  revenues  available  considered  and  the  ef- 
fect upon  the  state  tax  closely  computed.  It  is  essential  that 
the  Governor  shall  pass  upon  these  proposals  and  ennunciate 
a  policy  with  respect  thereto. 

All  these  things  except  as  to  the  Judicial  and  Legislative 
departments  are  provided  for  in  Chapter  174  above.  Apparent- 
ly these  department  swere  omitted  on  the  "co-ordinate  powers" 
theory  of  the  Constitution,  but  the  Governor  has  a  right  to 
know  how  the  judicial  department  spends  and  proposes  to 
spend  money,  that  is  not  a  judicial  function,  and  he  has, 
through  his  veto  power,  an  actual  partnership  in  the  legislative 
branch,  there  is  no  sound  reason  why  he  should  not  recom- 
mend as  to  either.  With  this  change  the  present  law  is  clearly 
adequate.  It  has  been  administered  with  i-easonable  success, 
yet  the  system  has  one  inherent  defect,  a  defect  as  vital  as 
seriously  to  threaten  in  the  long  run  tlie  success  nol   only  of 


172  REPORT  OF  THE  NEW  MEXICO 

this  law,  but  of  any  other  which,  under  existing  conditions 
might  be  enacted. 

The  budget  estimates  now  submitted  and  the  appropriation 
acts  of  the  legislature  relate  to  the  state  fiscal  years,  beginning 
on  December  first  next  succeeding  and  continuing  for  two  years 
thereafter.  The  estimates  are  submitted  to  and  revised  by  the 
Governor  in  office  in  December.  Unless  re-elected  this  gover- 
nor retires  on  the  January  first  preceding  the  convening  of 
the  legislature  which  must  consider  and  pass  the  appropria- 
tions. He  will  have,  therefore,  no  control  over  the  presentation 
of  the  estimates  to  the  legislature,  no  control  over  the  subse- 
quent adndnistration  of  the  budget  which  in  fact  will  not  be 
completed  before  the  expiration  of  the  term  of  his  successor. 
Not  only,  therefore,  is  the  governor  supervising  the  preparation 
of  the  budget,  unable  in  his  official  capacity  to  see  it  com- 
pleted, he  is  quite  likely  as  an  outgoing  official  to  have  but 
little  interest  in  its  preparation.  On  the  contrary  his  succes- 
sor, who  must  present  it  and  administer  it  for  the  greater  part 
of  its  life,  has  no  voice  in  or  cortrol  over  its  preparation  and 
the  executive  and  legislative  policies  inherent  in  it.  A  budget 
is  not  merely  a  financial  plan,  it  is  the  vital,  life-giving  factor 
in  the  activities  of  the  state.  Upon  its  provisions  depend,  more 
than  upon  anything  else,  the  course  of  state  administration 
for  the  period  of  its  existence.  It  cannot  function  adequately 
without  the  sympathy  and  understanding  of  the  Chief  Execu- 
tive. Under  the  existing  conditions  it  is  impossible  to  guaran- 
tee that  the  incoming  governor  will  approach  the  budget  esti- 
mates as  prepared  by  his  predecessor,  either  with  sympathy  or 
understanding.  There  is  no  reason  wdiy  he  should.  The  pre- 
paration of  these  estimates  should  be  his  job,  he  should  be  their 
author  and  should  be  responsible  for  their  contents.  He  should 
not  be  asked  to  underw-rite  the  conclusions  of  his  predecessor 
or  to  press  the  legislature  for  their  adoption.  Neither  shoiild 
he  be  placed  in  the  unpleasant  position  of  opposing  or  aban- 
doning these  recommendations  and  proposing  his  own,  unen- 
lightened by  the  knowledge  secured  by  the  study  of  the  esti- 
mates and  the  arguments  of  those  who  favored  or  opposed  the 
specific  items  of  expenditure  proposed.  The  incoming  gover- 
nor should  have  charge  of  the  prepai-ation  of  the  budget,  should 
conduct  the  hearings  relating  to  it,  should  determine  the  policy 
to  be  followed  by  his  office  and  should  have  time  to  do  these 
things  before  reporting  to  the  legislature.  In  no  other  way, 
as  a  matter  of  practical  administration,  can  a  satisfactory  sys- 
tem be  evolved.  It  is  suggested  that  all  these  conditions  could 
be  met  without  constitutional  change.  The  legislature  could 
meet,  organize,  select  its  committees  and  adjourn  to  reconvene, 
let  us  sav  on  ^Mareh   first.     The   estimates  submitted  to  the 


SPECIAL  REVENUE  COMMISSION  173 

retiring  governor  could  be  taken  up  by  the  new  incumbent, 
analyzed,  hearings  conducted  and  policies  determined  free  from 
the  pressure  of  legislative  business.  With  this  change  in 
method,  simple  in  itself,  yet  vital  to  success,  the  present  law 
and  administration  of  the  preparation  of  the  budget,  is  entirely 
satisfactory. 

It  would,  in  our  opinion,  be  wuse  to  submit  to  the  voters 
■with  the  other  constitutional  amendments  proposed,  one  amend- 
ing Section  5  of  Article  IV  of  the  Constitution  to  provide  for 
the  meeting  of  the  legislature  in  March  or  April  rather  than 
in  January  as  is  now  the  case.  Such  a  change  would  in  many 
respects  be  preferable  to  the  present  date  of  meeting. 

The  second  step  in  the  budget  procedure  is  the  transmittal 
to  the  legislature  of  the  estimates  recommended  by  the  gov- 
ernor, their  consideration  by  the  legislature  and  the  passage  of 
the  appropriation  bill. 

On  this  step  the  present  law  is  adequate  but  the  actual 
practice  is  noc.  Appropriations,  under  a  good  budget  practice, 
are  made  in  total,  all-inclusive  amounts  and  all  revenues  ap- 
propriated by  general  law  are  either  required  to  be  paid  into 
the  general  state  funds,  or  if,  specially  set  aside  for  the  activity 
in  question,  are  used  to  reduce  the  appropriations  from  general 
state  revenues.  The  actual  practice  in  New  Mexico  is  the  op- 
posite of  the  correct  rule.  The  special  revenues  are  set  aside 
Avithout  reserve  and  are  available  for  the  expenditure  regard- 
less of  amount,  and  the  balance,  which  is  set  out  as  a  specific 
appropriation,  is  available  regardless  of  the  amount  needed  to 
meet  the  estimated  total  expenditure.  To  illustrate  specifically, 
most  of  the  state  institutions  of  New  Mexico  are  the  benefi- 
ciaries of  land  endoAvmens,  the  income  of  which  is  available 
for  their  use.  In  the  illustration  below  the  estimated  needs 
and  special  revenues  (estimated  $25,000 — actual  $35,000)  are 
set  out  in  hypothetical  form  wjlli  llic  effect  under  correct  and 
actual  NcAv  Mexico  practice: 

Actual  Actual  TJesult 

Budget  Result  Cor-         Present  New 

Kstiiiiate  rect  Practice    Mexico  Practice 

Expenditures $100,000  $100,0*00  $100,000 

Special  Revenues  25.000  35,000  35,000 

Appropriations  from  taxes     75,000  65,000  75,000 

Under  the  actual  practice  if  the  special  revenues  arc  under- 
estimated the  institution  secures  an  appropriation  in  excess  of 
the  estimated  needs.  If,  on  the  other  hand,  the  six-ciul  revenues 
are  over-estimated  the  institution  receives  an  appropriation 
less  than  the  estimated  needs.    This  result  is  wrong  both  from 


174  REPORT  OF  THE  NEW  MEXICO 

the  standpoint  of  the  taxpayer  and  from  that  of  the  institu- 
tion to  which  the  appropriation  is  made. 

A  further  weakness  arises  from  the  fact  that  state  tax 
collections  cannot  be  forecast  with  absolute  accuracy,  and 
the  actual  appropriations  are  credited  with  funds  as  taxes  are 
collected  in  the  amounts  actually  collected.  This  again  re- 
sults in  surpluses  or  deficits  not  in  any  wise  connected  with 
appropriations  as  such.  Whether  tax  collections  are  good  or 
bad,  institutions  and  departments  should  receive  the  amounts 
appropriated  and  no  more  or  less.  Correct  practice  should  set 
up  the  actual  sums  appropriated  and  should  make  such  sums 
available  for  the  particular  fiscal  year.  The  aggregate  of  ap- 
propriations less  the  sum  total  of  special  revenues  represents 
the  net  sum  to  be  secured  from  taxes.  This  is  a  matter  of  gen- 
eral state  finance  and  should  be  so  dealt  with.  The  state 
tax  should  not  be  apportioned  by  purposes.  If  it  produces 
less  than  the  appropriations,  the  state  should  borrow  the  dif- 
ference, if  a  surplus,  the  surplus  should  be  generally  avail- 
able for  future  appropriation.  The  appropriation  bills  should 
be  drawTi  conformably  to  the  above  principles. 

A  further  detail  of  practice,  highly  desirable  in  itself, 
can  be  developed  readily  if  the  above  suggestion  relative  to 
the  presentation  of  estimates  by  the  governor  were  adopted. 
Not  only,  under  the  present  practice,  will  the  estimates  go  be- 
fore the  legislature  deprived  of  the  full  guidance  of  the  gover- 
nor who  prepare  them,  but  the  chairmen  of  the  appropriation 
committees  of  the  House  and  Senate  are  not  in  close  touch  with 
the  preliminary  steps  and  not  necessarily  in  sympathy  with 
them.  If  the  consideration  of  the  estimates  were  deferred  until 
the  new  governor  is  inaugurated  and  the  legislature  organized, 
these  chairmen  and  their  committee  associates  could,  by  invita- 
tion of  the  governor,  be  associated  with  him  in  the  preliminary 
steps  and  agreement  secured  so  that  the  budget  submitted  by 
the  governor  could  be  reported  promptly  out  of  committee 
probably  without  substantial  change.  In  any  event  the  useless 
duplication  of  effort  involved  in  a  completed  presentation  of 
institutional  and  departmental  needs  once  to  the  governor  and 
again  to  the  legislature  could  be  obviated.  The  constant  lobby- 
ing of  representatives  of  the  beneficiaries  before  the  legislature 
and  the  great  loss  of  time  involved  thereby  could  be  completely 
avoided. 

Administration  of  The  Budget. 

Finally  and  in  many  ways  most  important  of  all,  is  the 
administration  of  the  budget.  By  that  is  meant  the  measures 
taken  by  the  administrative  and  auditing  functions  of  the 
state  to  see  that  funds  are  raised,  that  appropriations  made 


SPECIAL  REVENUE  COMMISSION  175 

by  the  legislature  are  administered  according  to  the  will  of  the 
legislature  as  expressed  in  the  appropriation  acts  and,  most 
particularly,  that  the  spending  authorities  are  not  permitted 
directly  or  indirectly  to  commit  the  state  in  excess  of  the 
authorized  expenditures.  In  this  respect  neither  the  law  nor 
the  present  administration  practices  are  adequate. 

The  law  is  not  adequate.  At  present  the  state  auditor  and 
the  state  treasurer  are  not  even  the  controller  and  custodian 
of  appropriated  funds.  Almost  without  important  exception 
the  large  spenders  of  state  funds  withdraw  these  funds  on 
blanket  vouchers,  deposit  them  within  their  own  control  and 
are  audited,  after  the  money  is  refunded  by  the  traveling  audi- 
tor. None  of  this  decentralization  should  be  permitted.  No 
state  supported  function  should  be  able  to  get  possession  of 
actual  funds.  It  should  draw  on  the  treasury  subject  to  pre- 
audit  by  the  auditor  only  in  the  name  of  its  payees  covering 
each  separate  expenditure.  The  proper  custodian  of  state  funds 
is  the  state  treasurer,  the  proper  auditing  of  the  disbursements 
of  state  agencies  requires  examination  in  advance  of  paymen- 
by  the  official  of  the  state  charged  with  that  specific  duty. 
The  past  audit  by  the  traveling  auditor,  in  the  event  of  ques- 
tionable expenditures  is  a  mere  post  mortem,  an  interesting 
resume  of  financial  history,  but  in  no  sense  an  effective  check 
upon  either  wastefulness,  violations  of  law,  or  criminal  mal- 
feasance. 

Nor  is  pre-audit  of  expenditure  vouchers  alone  an  effective 
check  in  the  administration  of  the  budget.  Disbursements,  in 
fact,  do  not  constitute  the  proper  measure  of  adherence  to  or 
violation  of  the  limits  set  by  appropriations.  The  proper  meas- 
ure is  the  contracts  to  pay  or  other  commitments  properly 
chargeable  to  the  appropriation  in  question.  As  soon  as  an 
obligation  to  pay  is  incurred  the  appropriations  should  be 
charged  and  when  commitments  so  charged  equal  the  appro- 
priation it  should  be  regarded  as  exhausted  regardless  of  the 
cash  state  of  the  funds.  The  state  auditor  should  keep  the 
records  of  such  charge  against  appropriations.  The  preven- 
tion of  a  single  ease  of  commitments  in  excess  of  appropria- 
tions, such  as  that  recently  occurring  in  the  Agricultural  Col- 
lege, would  pay  the  cost  of  such  extra  record  keeping  for  many 
years.  Without  such  a  system  of  control  the  best  system 
known  of  preparing  and  voting  the  budget  is  largely  wasted 
motion. 

Recapitulation: 

1.  Little  or  no  additional  law  covering  the  preparation 
of  estimates  and  the  presentation  thereof  by  the  gov- 
ernor. 

2.  Changes  of  practice  so  that  the  incoming  governor  and 


176  REPORT  OF  THE  NEW  MEXICO 

legislature  may  participate  in  the  steps  preliminary  to 
the  governor's  report. 

3.  Changes  of  the  form  of  appropriation  bills  fixing 
absolute  total  sums  available  for  expenditure. 

4.  Changes  both  in  law  and  practice  of  the  state  auditing 
system  so  that  the  custody  and  control  of  all  state 
funds  shall  remain  in  the  properly  constituted  state 
offices  until  actually  expended. 

5.  Changes  both  in  law  and  practice  so  that  the  appro- 
priations shall  be  controlled  by  charges  for  commit- 
ments instead  of  disbursements. 

Tax  Limitations. 

The  constitutional  lindtations  as  to  tax  levies  are  found  in 
Section  2  of  Article  VIII.  "Taxes  levied  upon  real  and  per- 
sonal property  for  state  revenue  shall  not  exceed  four  mills  an- 
nually on  each  dollar  of  the  assessed  valuation  thereof  except 
for  the  support  of  educational,  penal,  and  charitable  institu- 
tions of  the  state,  payment  of  the  state  debt  and  interest  there- 
on; and  the  total  annual  tax  levy  on  such  property  for  all 
state  purposes  exclusive  of  necessary  levies  for  the  state  debt 
shall  not  exceed  ten  mills." 

Section  12  of  Chapter  54  of  the  laws  of  1915  provides: 
"The  maximum  rate  of  tax  to  be  levied  for  all  state  purposes 
and  uses,  including  the  educational,  penal  and  charitable  in- 
stitutions, shall  not  exceed  three  mills  on  the  dollar  of  the 
assessed  valuation  of  all  property  subject  to  taxation  in  the 
state.  The  maximum  rate  of  tax  to  be  levied  for  all  county 
purposes  and  uses,  excepting  special  school  tax  levies,  special 
levies  on  specific  classes  of  property,  shall  not  exceed  five 
mills  on  the  dollar.  The  maximum  rate  of  tax  to  be  levied  for 
city,  town  and  village  purposes  or  uses,  shall  not  exceed  three 
mills  on  the  dollar." 

The  maximum  rate  for  cities,  towns  and  villages  was  in- 
creased to  five  mills  by  Chapter  17,  Laws  of  1919. 

"Special  school  tax  levies  may  be  made  in  accordance  with 
law  not  exceeding  five  mills  on  the  dollar.  All  tangible  prop- 
erty shall  be  assessed  and  taxed  upon  its  actual  value. 

"The  foregoing  limitations  shall  not  apply  to  levies  for 
payment  of  the  public  debt  or  interest  thereon." 

Chapter  74  of  the  Laws  of  1915  provides  that  "No  county, 
city,  village  or  school  district  shall  in  any  year  make  tax  levies 
Avhich  will  in  the  aggregate,  produce  an  amount  more  than 
five  per  cent  in  excess  of  the  amount  produced  by  tax  levies 
therein  during  the  year  preceding." 

"In  case  the  amount  desired  to  be  produced  by  tax  levies 
is  more  than  five  per  cent  greater  than  the  amount  produced 


I 


SPECIAL  REVENUE  COMMISSION  177 

in  the  year  preceding,  such  fact  shall  be  set  forth  in  the  form 
of  a  special  request-and  filed  with  the  State  Tax  Commission. 
In  case  the  State  Tax  Commission  approves  such  proposed  in- 
crease it  shall  specifically  authorize  the  same ;  if  it  disapprove, 
it  shall  so  state  with  its  reason  therefor,  and  its  decision  shall 
be  final." 

(Note :  A  resolution  for  the  proposal  to  make  the  require- 
ments of  this  act  as  a  part  of  the  constitution  was  passed  by  the 
legislature  of  1917  but  failed  to  secure  popular  approval  at 
the  election.) 

The  legislature  of  1917,  Section  17  of  Chapter  38  provided 
for  a  state  levy  of  one  mill  for  roads  to  be  excepted  from  the 
limitations  of  Section  12  of  Chapter  54  of  the  Laws  of  1915 
as  to  state  levies.  This  levy  Avas  increased  to  one  and  a  half 
mill  by  'Section  1  of  Chapter  154  of  the  laws  of  1919.  The 
1917  legislature  (special  session,  Chapter  5,  section  8)  pro- 
vided also  for  one  mill  county  tax  for  roads  for  the  years  1917, 
1918,  excepting  the  tax  levies  from  both  the  five  mill  and  the 
five  per  cent  limitations.  In  1919,,  a  three  mill  levy  for  roads 
was  imposed  for  the  years  1919,  1920,  1921  which  was  also  ex- 
cepted from  the  limitations  mentioned.  (See  Chapter  168, 
Laws  of  1919).  Levies  for  road  construction  were  permitted 
by  the  1919  legislature  in  San  Juan,  Rio  Arriba,  Sandoval  and 
Bernalillo  counties  outside  the  five  mill  limit  and  at  the  special 
session  in  1920,  Sierra,  Socorro  and  Grant  counties  were  al- 
lovv'ed  to  make  similar  road  levies. 

Chapter  83  of  the  Laws  of  1915  fixes  a  maximum  limit 
upon  the  county  levy  for  school  maintenance  of  18  mills.  With- 
in this  maximum,  the  five  per  cent  limitation  prescribed  by 
Chapter  74,  Laws  of  1915,  is  of  no  effect.  All  school  levies 
are,  in  fact  outside  the  five  per  cent  limitation. 

The  various  acts  excepting  all  school  and  certain  road 
levies  from  the  limitations  upon  levies  in  general,  show  A\ith 
what  ease  the  legislatures  may  set  aside  laws  passed  by  its 
predecessors.  If  a  constitutional  amendment  could  be  secured 
to  fix  reasonable  limitations,  it  would  be  desirable  to  bring  it 
about.  Pending  the  adoption  of  such  an  amendment,  some 
legislation  is  required  to  bring  levies  and  expenditures  williin 
control. 

The  commission's  .suggestion  as  lo  lax  limitations  is  lliat 
all  present  limitations  be  retained  and  that  within  such  limi- 
tations taxing  authorities  should  not  increase  lolal  lax  rates 
except  upon  adequate  represent a1  ions  to  and  approval  by  the 
State  Tax  Commission.  This  should  apply  to  county,  incor- 
porated city,  town  and  village  and  school  district  levies;  and  in 
fact  to  all  local  tax  levies,  the  object  being  to  liavr  one  depart- 
ment tln-ough  whieb  all  facts  as  to  levies  shall  jniss.    Tbe  fixing 


\ 


178  REPORT  OF  THE  NEW  MEXICO 

of  the  state  tax  rate  and  its  certification  should  be  the  duty  of 
the  State  Tax  Commission  rather  tlian  the  auditor's. 

There  should  be  created  within  the  State  Tax  Commission 
a  budget  division  in  charge  of  a  competent  official  appointed 
by  the  governor.  His  duty  should  be  to  acquaint  himself 
fully  with  financial  conditions  in  the  various  political  units  of 
the  state,  assist  in  the  preparation  of  their  budgets  and  act 
as  the  representative  of  the  State  Tax  Commission  and  the 
governor  in  all  matters  relating  to  budgets  and  tax  levies. 

An  adequate  budget  law  should  be  devised  for  counties  and 
towns,  in  fact  for  all  tax  levying  sub-divisions  as  well  as  for 
the  state.  Such  a  law  should  also  provide  for  a  control  of 
expenditures  in  accordance  with  the  several  budget  allow- 
ances. Provisions  might  be  made  for  certain  transfers  upon 
proper  representations  to  the  budget  officer,  transfers  A'ould  be 
subjects  to  the  condition  that  all  expenditures  for  a  group  of 
related  purposes  should  be  kept  Avithin  a  specific  maximum. 

Bon,d  Issues  and  Bond  Control. 

The  constitutional  provisions  with  reference  to  state,  coun- 
ty and  municipal  indebtedness  are  found  in  Article  9,  Section  7 
to  13,  inclusive.  By  these  sections  it  is  required  that  no  in- 
debtedness shall  be  incurred  except  upon  the  vote  of  the  elec- 
tors residing  within  the  political  units  by  which  the  indebted- 
ness is  to  be  incurred.  The  only  exception  is  found  in  Section 
•7,  of  Article  9,  which  provides  that  not  to  exceed  $200,000  may 
be  borrowed  by  the  state  to  meet  casual  deficits,  failure  in 
revenue  or  necessary  expenses.  Of  course  the  state  may  con- 
tract debt  to  suppress  insurrection,  and  to  provide  for  the  pub- 
lic defense. 

Section  8  of  Article  9  of  the  Constitution  provides  that  the 
indebtedness  of  the  state  shall  not  exceed  one  per  cent  of  the 
assessed  valuation  of  all  the  property  subject  to  taxation  in 
the  state,  as  shown  by  the  preceding  general  assessment.  Coun- 
ties and  incorporated  cities,  towns  and  villages  may  not  incur 
indebtedness  exceeding  four  per  cent  of  the  taxable  property, 
except  that  incorporated  cities  ,towns  and  villages  may  incur 
indebtedness  beyond  this  limitation  for  the  purpose  of  supply- 
ing water  or  of  constructing  a  sewer  system.  School  districts 
may  not  incur  indebtedness  in  excess  of  six  per  cent  of  the 
assessed  valuation  of  taxable  property.  Under  statutory  pro- 
visioins,  Chapter  54  of  the  Laws  of  1915,  as  amended  by 
Chapter  68  of  the  Laws  of  1919,  counties,  cities  and  villages 
are  limited  to  an  amount  of  indebtedness  not  exceeding  one 
and  one-third  per  cent  of  taxable  property,  with  the  exception 
as  noted  above  as  to  supplying  water  and  constructing  sewer 
systems. 


SPECIAL  REVENUE  COMMISSION  179 

While  the  maximum  of  indebtedness  for  each  unit  as  com- 
pared with  the  valuation  seems  small,  the  aggregate  obligations 
for  any  unit  authorized  to  issue  bonds  would  be  large  if  in- 
curred to  the  limit.  For  instance,  in  any  city  if  the  maximum 
obligations  were  incurred  by  state,  county,  city  and  school 
district  to  the  constitutional  limit,  the  total  obligation  would 
amount  to  15  per  cent  of  the  taxable  wealth  of  such  city. 
Under  the  statutory  limit  the  total  would  amount  to  10  per 
cent  of  the  taxable  wealth  of  the  community.  This  would 
prove  a  heavy  burden  to  carry  along  with  that  of  tax  levies 
for  current  expenses.  It  is  for  the  purpose  of  avoiding  the 
danger  of  over-bonding  that  the  Commission  feels  it  necessary 
to  make  the  suggestions  here  offered. 

The  limitations  provided  for  in  the  constitution  and  by 
statute  are,  we  believe,  such  as  are  necessary,  and  we  would 
recommend  that  these  limitations  be  not  disturbed.  We  be- 
lieve, however,  that  an  amendment  to  the  constitution  should 
be  kept  in  mind  for  consideration  which  would  make  it  im- 
possible to  issue  bonds  for  a  period  longer  than  the  life  of  the 
improvement  for  which  the  bonds  are  issued.  The  maximum 
of  fifty  years  provided  for  in  the  constitution  is  entirely  too 
long.  Pending  the  adoption  of  a  constitutional  amendment, 
statutes  relating  to  bond  issues  should  make  a  clear  require- 
ment that  bonds  should  be  issued  in  such  a  way  as  to  be  re- 
tired in  a  reasonable  time.  If  this  requirement  is  not  specified 
we  may  find  bond  issues  burdening  the  taxpayers  of  this  and 
future  generations  long  after  the  so-called  permanent  improve- 
ment has  disappeared. 

We  find  that  there  is  a  practice  which  amounts  to  a  prac- 
tical evasion  of  the  limitations  upon  bond  issues,  in  the  issues 
of  state  debentures  or  certificates  of  indebtedness.  Such  se- 
curities are  issued  without  being  submitted  to  a  vote  of  the 
people  in  pursuance  of  laws  passed  for  the  purpose  of  pro- 
viding for  the  construction  of  roads  or  for  buildings  at  public 
institutions.  The  certificates  of  indebtedness  issued  for  war 
purposes  were  not  of  this  class,  as  the  constitution  clearly 
authorizes  the  state  to  contract  indebtedness  to  provide  for  the 
public  defense.  It  is  said  that  certificates  of  indebtedness  may 
be  issued  for  short  periods  against  tax  levies  provided  to  mept 
payments  of  interest  and  principal,  but  it  would  seem  that  in 
that  case  the  levies  necessary  might  force  a  violation  of  the 
constitutional  provisions  relating  to  the  state  tax  levy  limita- 
tion. We  believe,  therefore,  that  the  issuance  of  such  certifi- 
cates of  indebtedness,  state  debentures  or  other  short  term  se- 
curities are  unconstitutional,  and  the  practice,  should  be  dis- 
continued. Instead  of  issuing  such  certifioates  of  indebted- 
ness it  would  be  better  to  make  tax  levies  and  allow  the  pro- 


180  REPORT  OF  THE  NEW  MEXICO 

eei'tls  to  accrue  until  tlu"  amount  necessary  for- the  improve- 
ment has  accumulated. 

At  the  end  of  the  fiscal  year,  November  30,  1914,  wc  find 
that  the  counties  had  outstanding  at  total  of  $3,212,424.07  in 
bonds,  and  the  state  had  $2,605,500.  This  makes  a  total  of 
$5,817,924.07.  It  is  probable  that  the  bonded  indebtedness  of 
school  districts,  cities,  towns  and  villages  would  })ring  the 
total  of  indebtedness  for  that  year  up  to  $8,000,000.00.  At 
the  end  of  the  sixth  fiscal  year,  November  30,  1918,  the  out- 
standing bonded  indebtedness  in  New  Mexico  was  as  follows: 
Counties,  $3,452,982.80;  school  district,  $1,516,199.10;  cities, 
towns  and  villages,  $2,975,697.60;.  state,  $2,856,000.00.  The  to- 
tal outstanding  bonded  indebtedness,  therefore,  on  November 
30,  1918,  was  $10,800,879.50. 

At  the  end  of  the  seventh  fiscal  year,  November  30,  1919, 
the  total  bonded  indebtedness  had  increased  to  $13,713,617.59, 
or  approximately  $40.00  per  capita;  or  about  $3.50  for  each 
$100  of  taxable  wealth.  The  total  amount  given  was  distri- 
buted as  follows :  Counties,  $3,525,852.40 ;  school  districts,  $3,- 
529,467.59 ;  cities,  towns  and  villages,  $2,980,297.60 ;  state,  $3,- 
678,000.00. 

Of  the  bonded  indebtedness  of  counties  it  is  found  that 
approximately  $1,250,000  was  issued  for  funding  or  refunding 
purposes,  and  it  is  felt  that  no  systematic  effort  is  made  to 
provide  for  the  retirement  of  bonds.  Interest  levies  are  made 
regularly  but  levies  for  sinking  purposes  are  not  made  in  ac- 
cordance with  the  requirements  of  the  laws  under  which  bonds 
were  issued.  It  sometimes  happens  that  sinking  fund  levies 
are  made  in  a  certain  year  and  in  later  years  the  proceeds  of 
such  levies  may  be  used  to  pay  interest.  We  do  not  believe 
that  the  proceeds  of  interest  and  sinking  fund  levies  are  used 
for  any  other  purpose  than  to  provide  for  interest  and  sinking 
funds ;  but  proceeds  of  sinking  fund  levies  are  sometimes  used 
to  pay  interest.  The  remedy  for  this  is  to  require  the  keeping 
of  an  interest  account  and  a  sinking  fund  account  for  each 
bond  issue  in  such  a  way  that  the  proceeds  of  levies  made  for 
these  purposes  shall  be  used  i-espectively  for  the  purposes  in- 
tended. It  should  be  made  the  duty  of  the  traveling  auditor 
to  pay  special  attention  to  the  methods  used  for  safeguarding 
interest  and  sinking  fund  accounts. 

The  practice  is  still  found  of  issuing  time  warrants  to  pay 
cuii-ent  bills.  When  such  warrants  have  reached  a  considerable 
amount  they  are  funded  by  submitting  a  bond  proposal  to 
the  electors.    This  is  not,  however,  a  common  occurrence. 

While  this  •  Commission  believes  that  a  system  of  bond 
control  should  be  initiated,  under  which  the  state  would  issue 
bonds  for  various  sub-division  and  assume  entire  responsibili- 


SPECIAL  REVENUE  COMMISSION  181 

ty  for  the  collection  of  interest  and  sinking  funds  and  the  safe- 
guarding of  such  funds,  it  is  believed  that  conditions  as  to  bond 
issues  may  be  greatly  improved  by  requiring  the  State  Tax 
Commission  to  exercise  a  limited  supervision  over  the  issuance 
of  bonds.  The  necessary  steps  in  voting  and  issuing  bonds 
should  be  prescribed  by  the  State  Tax  Commission  and  the 
necessary  forms  used  throughout  the  proceedings  should  be 
standardized.  All  proposals  to  issue  bonds  should  be  first 
submitted  to  the  State  Tax  Commission  for  its  approval, 
and  no  bonds  should  be  held  regularly  issued  until  registered 
with  the  Commission.  In  approving  proposals  for  bond  issues 
the  State  Tax  Commission  should  consider  the  laws  governing 
the  limitations  upon  indebtedness  as  to  the  legality  of  all  the 
steps  necessary. 

The  State  Tax  Commission  might  also  be  required  to  set 
forth  such  facts  as  the  electors  should  know  in  order  to  vote 
intelligently  upon  the  proposal.  It  should  be  made  the  special 
duty  of  the  Commissiion  to  consider  the  time  to  run  of  the 
proposed  bonds,  and  approval  should  be  withlield  in  cases 
where  the  period  of  the  indebtedness  would  exceed  the  life  of 
the  improvement. 

The  State  Tax  Commission  should  also  prescribe  the  meth- 
ods by  Avhich  funds  are  secured  to  pay  interest  and  principal. 
As  to  principal  payments  this  Commission  is  convinced  of  the 
advisability  of  having  bonds  issued  with  provision  for  serial 
payments;  that  is,  a  certain  proportion  of  the  bonds  should  bo 
retired  annually.  This  provision  should  apply  to  refunding 
bonds  as  well  as  to  original  issues.  As  soon  as  possible  we 
believe  that  the  State  Tax  Commission  should  assemble  full 
and  complete  data  as  to  present  outstanding  bonds  for  various 
sub-divisions,  and  local  officers  should  be  required  by  law  to 
secure  and  furnish  such  information  to  the  State  Tax  Com- 
mission at  the  earliest  possible  date. 

(Note:     See  Appendix  XII,  XXI.) 


182  REPORT  OF  THE  NEW  MEXICO 

CONCLUSION. 

In  conclusion  your  Commission  respectfully  submits  that 
because  of  the  wide  scope  of  the  inquiry  called  for  by  the  law 
creating  our  Commission,  its  investigations  have  necessarily 
been,  in  many  respects,  incomplete  and  more  or  less  super- 
ficial. Some  matters  properly  within  the  range  of  inquiry 
have  been  missed  altogether,  others  have  been  nilich  less  tho- 
roughly investigated  than  would  have  been  the  case  had  the 
time  for  the  inquiry  been  longer.  The  attempt  has  been  made, 
however,  to  thoroughly  analyze  and  come  to  definite  conclu- 
sions about  as  many  of  the  problems  presented  as  was  possible 
in  the  time  and  with  the  equipment  provided.  Whatever  merit 
there  may  be  in  this  report  is  due  in  some  degree  to  the  assist- 
ance given  the  Commission  by  the  Taxpayers'  Association  of 
New  Mexico. 

Acknowledgment  is  particularly  due  to  Professor  Robert 
Murray  Haig,  of  Columbia  University,  who  was  retained  by 
the  Commission  for  special  phases  of  the  investigation,  but  who 
has  kept  up  his  interest  in  the  general  situation  and  who  has 
been  a  great  help  in  other  ways. 

We  believe  that  if  our  recommendations  are  adopted, 
good  may  result,  but  we  are  conscious  of  the  fact  that  neither 
bad  laAvs  nor  defective  administration  are  by  any  means  wholly 
responsible  for  such  defects  as  may  now  exist  in  our  adminis- 
trative system.  There  is  no  phase  of  governmental  activity 
Avhich  offers  such  varied  methods  of  evasion  and  avoidance 
as  taxation.  There  are  no  laws  within  the  range  of  our  govern- 
mental system  which  depend  so  much  for  success  or  failure 
on  the  qualifications  of  those  entrusted  with  their  administra- 
tion as  do  taxation  and  revenue  laws. 

We  do  not  believe  that  our  system  of  government  is 
wrong.  If  from  no  other  viewpoint  than  a  practical  and 
materialistic  one,  we  are  sure  that  our  people  must  some  time 
wake  up  to  the  realization  that  if  to  the  many  difficulties 
nature  has  haiidieapped  us  with,  we  continue  to  be  embarrassed 
by  an  extravagant  government,  the  progress  in  the  next  ten 
years  will  prove  less  than  that  during  the  past  ten  years.  That 
the  small  increase  in  our  population  during  the  past  decade,  as 
revealed  by  the  recent  census,  has  been  a  shock  to  nearly  all 
the  people  of  this  state  is  certain.  We  believe  the  administration 
of  our  material  resources  and  the  conduct  of  our  public  af- 
fairs could  be  established  on  a  sounder  and  more  reasonable 
and  conservative  basis.  Nothing  will  go  further  at  this  time 
to  re-establish  confidence  within  and  without  the  state  than 
the  adoption  by  the  coming  legislature,  in  cordial  co-operation 
Avith  the  executive,  of  measures  which  will  clearly  demonstrate 


\ 


SPECIAL  REVENUE  COMMISSION  183 

that  the  people  fo  New  Mexico  stand  for  the  fairest  and  most 
equitable  distribution  of  the  tax  burden  humanly  possible  of 
attainment,  and  an  administrative  system,  state,  county,  and 
municipal,  founded  upon  the  idea  that  government  is  an  essen- 
tial and  economic  necessity  justified  only  on  the  basis  of  the 
greatest  attainable  efficiency. 

Respectfully  submitted  this  23rd  day  of  November,  1920. 

H.  J.  HAGERMAN,  Chairman, 
W.  W.  RISDON, 
ALBERT  G.  SIMMS. 

We  concur  in  the  foregoing  report  subject  to  certain  re- 
servation to  be  specifically  stated  by  us  hereafter. 

WM.  G.  HAYDON, 
JOHN  JOERNS. 


RESERVATION  AS  TO  MINE  TAX  ARTICLE 
BY  MR.  HAYDON. 

I  consent  to  the  article  on  "Mine  Tax  Law"  because  I  do 
not  want  to  obstruct  any  measure  which  the  majority  believe 
will  produce  the  greatest  income  to  the  state,  but  my  personal 
belief  is  that  the  output  should  be  retained  as  a  basic  principle 
of  taxing  mines,  allowing  for  producing  mines  proper  areas, 
other  mineral  lands  not  of  proven  value  to  be  taxed  at  their 
actual  value. 

W.  G.  HAYDON. 


185  REPORT  OF  THE  NEW  MEXICO 

APPENDICES 

(Note: — The  appendices  are  not  an  integral  part  of  the  conclu- 
sions reached  by  the  Special  Revenue  Commission.  These  tables, 
statements  and  memoranda  are  part  of  a  large  quantity  of  material 
submitted  and  considered  by  the  Commission  during  the  course  of  its 
deliberations.) 

Page 

APPENDIX  I Special  Revenue  Commission  Act 187 

APPENDIX  II Personal  Income  Tax  Yield  in 

Nev^^  Mexico  (Haig)   189 

APPENDIX  III Report  N.  T.  A.  Committee  on  mine  taxation  193 

APPENDIX  IV Mines  and  mineral  lands,  assessment 201 

APPENDIX  V Minnesota  method  of  mine  assessment 203 

APPENDIX  VI Michigan  method  of  mine  assessment 208 

APPENDIX  VII Report  T.  P.  A.  Committee  (Short  Ballot) 213 

APPENDIX  VIII Bond  Control    (Indiana)    217 

APPENDIX  IX .Council  Defense  Report  219 

APPENDIX  X Agricultural  College  Report   (Stephens) 227 

APPENDIX  XI Teachers   salaries,    1919-20 242 

APPENDIX  XII Railroad  assessment  1920 246 

APPENDIX  XIII Railroads,  taxes  paid 251 

APPENDIX  XIV Memoranda  as  to  assessment  omitted 

property,  etc.  (Joerns)  254 

APPENDIX  XV Centralized  Employment  (Myers)   256 

APPENDIX  XVI Cost  state  government  262 

APPENDIX  XVII .Receipts  and  payments  county  governments  266 

APPENDIX  XVIII...: Appropriations  1912,  1919  (Joerns)  268 

APPENDIX  XIX .Value  net  output  1915-1919 271 

APPENDIX  XX Facts  as  to  state  lands 279 

APPENDIX  XXI Bonded   indebtedness  280 

APPENDIX  XXII Sale  and  assessed  values 281 

APPENDIX  XXIII Educational  conditions  compared  (U.  S. 

Bureau  of  Education)   282 

APPENDIX  XXIV Need  of  road  funds  '. 283 

APPENDIX  XXV Highway  Commission  receipts  and 

expenditures 285 

APPENDIX  XXVI Assessed  values — some  comparisons  290 

APPENDIX  XXVII County  valuations,  1915-1919 292 

APPENDIX  XXVIII State  assessment,  1918,  1919  (Joerns)  294 

APPENDIX  XXIX Assessment,  gross  and  net,  1919 295 

APPENDIX  XXX State  tax  and  production  296 

APPENDIX  XXXI Assessment  analyzed  by  classes  of  property  297 

APPENDIX  XXXII State  and  county  levies  and  production 

1915-1919  298 

APPENDIX  XXXIII School  district  taxes  301 

APPENDIX  XXXIV Chino  Copper  Company,  taxes  paid 

1915-1919  ., 302 


186  REPORT  OF  THE  NEW  MEXICO 

Page 

APPENDIX  XXXV status  taxation  in  different  states  305 

APPENDIX  XXXVI .Total  assessment  certain  mininng 

companies  (Joerns)  307 

APPENDIX  XXXVII Receipts  of  state  analyzed  1919 316 

APPENDIX  XXXVIII -Population  and  school  census  compared 318 

APPENDIX  XXXIX Receipts  and  expenditures,  educational 

institutions 319 

APPENDIX  XL .Receipts  and  expenditures,  state 

institutions  ._  - 321 

APPENDIX  XLI State  levies  1912-1920  .' 323 

APPENDIX  XLII Production  of  all  tax  levies,  1914-1919 324 


.  SPECIAL  REVENUE  COMMISSION  187 

APPENDIX  I. 
SPECIAL  REVENUE  COMMISSION  ACT. 

(Chapter  9,  Fourth  Legislature,  Special  Session,  1920) 

AN  ACT  Creating  a  Commission  to  investigate  and  report 
upon  the  question  of  adopting  an  Income  Tax  for  the  State 
of  New  Mexico,  with  reference  to  existing  systems  of  tax- 
ation, and  appropriating  money  to  pay  the  expenses  there- 
of.—H.  B.  No.  12;  Approved  Feburay  21,  1920. 

Be  It  Enacted  by  The  Legislature  of  the  State  of  Ncav  Mexico : 
Section  1.  That  the  Governor  of  the  State  of  New  Mexico 
be  and  he  is  hereby  empowered  and  directed  to  appoint  a  Com- 
mission of  five  persons,  citizens  of  the  United  States  of  Ame- 
rica, and  citizens  and  residents  of  the  State  of  New  Mexico, 
who  shall  serve  without  pay  and  of  which  number  not  more 
than  three  shall  be  of  one  political  party  which  commission 
w^hen  appointed  shall  have  power  and  authority  to  inquire  into 
and  make  recommendations  as  to  the  policy  or  necessity  of  the 
adoption  by  appropriate  legislation  of  a  system  of  taxation  of 
incomes  and  the  relation  of  such  system  of  taxation  to  the 
present  system  of  taxation  of  property  in  New  Mexico,  real 
and  personal,  tangible  and  intangible,  the  taxation  of  the  net 
income  of  producing  mines  and  all  other  methods  and  poAvers 
of  taxation  in  force  in  the  State  of  New  Mexico  or  which  may 
be  recommended  for  adoption  by  the  legislature  of  the  State 
of  New  Mexico. 

Section  2.  Said  Commission  shall  have  its  office  at  the 
City  of  Santa  Fe,  New  Mexico,  but  it  is  empowered  to  meet 
at  such  places  within  the  State  of  New  Mexico  as  may  be  con- 
venient for  the  transaction  of  its  business ;  it  shall  have  poAver 
to  take  testimony  and  to  examine  witnesses  and  for  that  pur- 
pose to  administer  oaths  and  the  Attorney-Ceneral  of  tlie  State 
of  New  Mexico  is  designated  as  the  legal  representative  of 
said  board  and  authorized  and  directed  to  advise  with  and 
assist  the  said  board  in  its  investigations  and  hearings.  The 
said  board  may  also  employ  such  clerical  help  as  may  he  nec- 
essary in  the  conduct  of  its  affairs. 

Section  3.  On  or  before  the  1st  day  of  January.  1921.  the 
said  board  shall  make  full  report  to  the  Govern oc  of  llie  State 
of  New  Mexico  of  its  proceedings  with  such  rccoiiiineiKlations 
upon  the  subject  of  taxation  and  upon  the  subject  of  legislation 
affecting  taxation  as  it  may  adopt  and  it  sluill  fui-thor  report 
its  recommendations  to  the  President  of  the  Somlc  jind  Id  tlie 
Speaker  of  the  House  of  the  next  ensuing  regular  session  of 
the  Legislature  of  New  Mexico. 


188  REPORT  OF  THE  NEW  MEXICO     • 

Section  4.  There  is  hereby  appropriated  out  of  moneys  in 
the  Treasury  of  the  State  of  New  Mexico,  not  otherwise  ap- 
propriated, the  sum  of  five  thousand  dollars  to  defray  the 
expenses  of  said  Commission.  The  moneys  so  appropriated  or 
so  much  as  shall  be  necessary  shall  be  disbursed  upon  vouchers 
signed  by  the  Chairman  of  the  Commission  and  approved  by 
the  (lovernor.  Itemized  statements  of  the  disbursements  under 
said  vouchers  shall  be  filed  in  the  office  of  the  Auditor  of  the 
State  of  New  Mexico. 

Section  5.  That  it  is  necessary  for  the  preservation  of  the 
public  peace  and  safety  of  the  inhabitants  of  the  State  of  New 
Mexico  that  the  provisions  hereof  become  effective  immediately 
and  therefore  an  emergency  is  hereby  declared  to  exist,  and 
this  act  shall  take  effect  from  and  after  its  passage  and  ap. 
proval. 


SPECIAL  REVENUE  COMMISSION  189 

APPENDIX  II. 

ESTIMATE  OF  PROBABLE  YIELD  OF  A  PERSONAL 
INCOME  TAX  IN  THE  STATE  OF 
NEW  MEXICO 

The  figures  used  in  the  computations  which  follow  are 
taken  from  a  publication  of  the  United  States  Government 
which  summarizes  that  assessment  data  on  the  federal  income 
tax  returns.     The  document  is  entitled: 

' '  Statistics  of  Income  Compiled  from  the  Returns  for  1917 
under  the  Direction  of  the  Commissioners  of  Internal 
Revenue.  (Washington  rioveiiinient  Ptg.  Office,  1919.) 

It  AvilL  be  noted  that  the  statistics  are  for  the  year  1917. 

Personal  income  of  $2000  and  over     $20,892,721 
Deduct :  Contributions     $    182,305 
Personal  Exemptions     9,498,200         9.680,505 

Net  subject  to  tax $11,212,216.00 

Personal  income  of  $1000  to  $2000     $10,752,000 
Deduct:  Contributions'  $      93,819 

Personal  Exemptions-    8,601,600         8,695,419 

Net  subject  to  tax  _ $  2,056,581.00 

Total  personal  incomes  of  $1000  and  over  sub- 
ject to  federal  tax $13,268,797.00 

Several  modifications  would  have  to  be  made  in  the  figures 
as  determined  a])ove  to  arrive  at  the  precise  amount  which 
would  be  subject  to  a  state  income  tax,  but  the  statistics  ai'e 
not  furnished  in  sufficient  detail  for  them  to  be  made. 

The  chief  modifications  to  be  made  are : 

Additions. 

1 — Intei-est  on  bonds  of  state  and  political  sub-divisions  thereof. 
2 — Salaries  of  state  and  local  officials  not  guarded  by  consti- 
tutional provisions. 

(1)  Estimates   on   same   relative   basis   as   above   viz:    $182,305-^ 
$20,892,721  X  10,752,000=$92,97.5. 

(2)  Estimates  on  the  basis  of  $1209  for  each  of  7168  returns. 


190  REPORT  OF  THE  NEW  MEXICO 

Subtractions. 

1 — Stock  dividends. 

2 — Interest  on  certain  securities  of  the  federal  government. 
3 — Salaries  of  certain  federal  officers. 

4 — Interest  on  money  borrowed  to  carry  certain  tax-exempt 
federal  bonds. 

These  adjustments  arc  not  important  and  no  great  error 
■will  be  made  if  it  be  assumed  that  the  additions  would  cancel 
the  subtractions. 

Assuming  the  state  administration  to  be  as  efficient  as 
the  federal,  it  is  apparent  then  that  a  state  income  tax  along 
the  lines  suggested  would  have  yielded  in  1917  about  $132,688 
for  each  one  per  cent  levied.  A  two  per  cent  flat  rate  would 
have  produced  about  $265,376. 

The  tables  which  follow  give  certain  details  of  the  federal 
assessment  of  1917  incomes  which  are  of  interest : 

Number  of  Personal  Returns^  1917 

Number  of  personal  returns :  $1000  to  $2000 7168 

Number  of  personal  returns:  $2000  and  over 4448 


Total 11616 

Personal  Returns 

Number  in  each  income  tax  group.  Net  income  $1000  and 
over,  19172. 

Total  number  of  returns 11616 

$  1,000  to  $  2,000 : 7168 

$  2,000  to  $  2,500 1473 

$  2,500  to  $  3,000 : 918 

$  3,000  to  $  4,000 838 

$  4,000  to  $  5,000 355 

$  5,000  to  $  6,000 : 233 

$  6,000  to  $  7.000 129 

$  7,000  to  $  8,000 „ : 110 

$  8,000  to  $  9,000 : 56 

$  9,000  to  $10,000 56 

$10,000  to  $1 5,000 ;. 1 35 

$15,000  to  $20,000 - 52 

$20,000  to  $25,000 26 

(1)  Statistics  of  income,  1919,  pp.  8,  10.) 

(2)  Statistics  of  income,  1917,  pp.  45,  47,  49,  50.) 


I 


SPECIAL  REVENUE  COMMISSION  191 

$25,000  to  $30,000 13 

$30,000  to  $40,000 21 

$40,000  to  $50,000 9. 

$50,000  to  $60,000 4 

$60,000  to  $70,000 ■  6 

$70,000  to  $80,000 _ 2 

$80,000  to  $90,000 4 

$  90,000  to  $100,000 1 

$100,000  to  $150,000 3 

$150,000  to  $200,000 2 

$200,000  to  $250,000 1 

Personal  Returns. 

Sex  and  family  relationship.  Net  income  $2000  and  over, 
1917^ 

Joint  returns  of  husbands  and  wives,  with  or  without  de- 
pendent children,  including  husbands  whose  wives,  though  liv- 
ing -with  them,  filed  separate  returns : 

Number  of  returns  3590 

Net  income $17,110,328 

Single  men — heads  of  family: 

Number  of  returns  - 171 

Net  income  $696,423 

Single  women — heads  of  families : 

Number  of  returns  50 

Net  income  $266,975 

Single  men — all  other: 

Number  of  returns  569 

Net  income  $2,452,694 

Single  women — all  other: 

Number  of  returns  - 51 

Net  income  $283,406 

Wives  making  separate  returns  from  husbands: 

Number  of  returns  17 

Net  income $82,895 

GRAND  TOTAL : 

Total  number  of  returns _ 4,448 

Total  net  income  _ _ $20,892,721 

Number  of  dependent  children 6,281 

Exemption  for  dependent  children  $1,256,200 


(1)     Statistics  of  income,  1917,  pp.  30,  32.) 


r 


192  REPORT  OF  THE  NEW  MEXICO 

Personal  Returns. 

Nature  of  lucoine.     Net  income  $2000  and  over,  1917\ 

"NVao-es  and  salaries $  6,889,203 

Business — 

Total  gross  sales  and  other  income  $34,890,072 

Total  deductions  26,131,834 

Net  income  from  business  8,758,238 

Par1nei-ship  profits  _ 1,742,100 

Piofits  from  sales  of  real  estate,  stocks,  bonds,  etc.        663,414 

Rents  and  royalties 1,136,822 

Dividends— 1913-16  .$    972,878 

1917  2,008,186 

Total  2,981,064 

Interest  and  investment  income , 475,110 


Total  income $22,645,951 

Genei-al  deductions  1,753,230 


Net  income $20,892,721 

Personal  Returns 

Classification  of  retui-ns  according  to  nature   of  income. 
Net  income  $2000  and  over,  1917-. 

Income  from  salaries  and  wages: 

Number  of  returns  showing  salary  and  Avages: 

as  the  principal  source  of  income 1,970 

Amt.  of  income  from  this  source  on  these  returns  $  5,626,143 

Amt.  of  income  from  this  source  on  all  returns $  6,889,203 

Income  f i-om  business : 

Number   of   returns   showing   business   as    the 

principal  source  of  income 1,878 

Amt.  of  income  from  this  source  on  these  returns  $  9,784,053 

Amt.  of  income  from  this  source  on  all  returns $11,163,752 

Income  from  investment : 

Number  of  returns  showing  investment  as  prin- 
cipal source  of  income 600 

Amt.  of  income  from  this  source  on  these  returns  $  2,936,858 

Amt.  of  income  from  this  source  on  all  returns $  4,592,996 

Grand  Total: 

Total  number  of  returns  4,448 

Total  amount  of  income $22,645,951 

(1)  Statistics  of  income,  191T,  pp.  36,  38. 

(2)  The  income  figures  are  gross.  Statistics  of  Income  1917,  p.  42. 


SPECIA  LREVENUE  COMMISSION  193 

APPENDIX  III. 

REPORT  OF  SPECIAL  COMMITTEE 
ON  MINES  TAXATION. 

(Presented  at  the  thirteenth  annnal  conference  of  the  National 
Tax  Association  at  Salt  Lake  City,  Utah,  September 
G-ll,  1.920.) 

The  Comuiittee  on  a  Model  System  of  State  and  Local 
Taxation  rtconuuends  for  general  adoption  by  the  states  three 
principal  taxes,  viz.,  a  personal  income  tax,  an  ad  valorem  tax 
on  tangible  property  and  a  tax  on  business.  Concerning  the 
taxation  of  mines  it  said,  "We  are  agreed  that  mines  should 
pay,  under  whatever  method  may  be  adopted,  a  tax  commensu- 
rate with  that  paid  by  other  real  estate  in  the  same  taxing 
jurisdiction."  We  feel  that  in  deference  to  the  main  com- 
mittee, Ave  are  bound  to  proceed  with  a  consideration  of  the 
subject  under  the  limitations  imposed  by  this  principle.  It  is 
the  principle  which  is  embodied  in  the  laws  and  constitutions 
of  most  of  the  states.  It  was  approved  by  the  special  com- 
mittee on  mines  taxation  reporting  in  1913,  and  we  believe  is 
supported  by  the  main  body  of  intelligent  opinion  in  this 
country. 

I. 

If  then  mines  should  pay  to  state  and  local  governments  a 
tax  commensurate  with  that  paid  by  other  I'eal  estate  how 
should  the  tax  on  mines  be  imposed  and  collected?  Oui-  answer 
is, — in  precisely  the  same  manner  that  taxes  are  imposed  and 
collected  on  other  real  estate.  The  Committee  on  Model  Sys- 
tem would  retain  the  ad  valorem  tax  on  other  forms  of  real 
estate  with  modernized  administration.  In  our  opinion  the 
equalization  of  the  taxes  on  mines  with  those  on  other  real 
estate  requires  that  no  exception  be  made  in  the  case  of  mines. 

This  opinion  is  governed  by  a  study  of  the  economic  and 
industi'ial  situation  prevailing  in  the  typical  mining  communi- 
ties of  the  countiy  in  relation  to  the  proposed  Model  System 
of  taxation.  The  populations  of  these  conimunilics  are  al- 
most entirely  dependent  on  lhe  mines.  In  a  gi'cat  majority 
of  them  the  value  of  mining  pi-opei-ty  exceeds  that  of  all  oilier 
property.  No  other  im])oi'tant  values  exist.  A  few  mines  and 
here  and  there  a  single  mine  supi)orts  almost  the  entire  ])oi)U- 
latioJi  of  the  local  taxing  jurisdiction  in  iinmy  cnscs  ninnbci'- 
ing  thousanfls  of  people.  In  numy  of  these  the  mines  are  held 
or  cont rolled  by  a  single  company.     So  long  as  the  mines  exist 


194  REPORT  OF  THE  NEW  MEXICO 

other  real  estate  has  value  but  wIumi  they  are  exhausted  no 
value  or  only  noniinal  value.  The  (•oiiiinunity  itself  shrinks 
and  not  uneonnuonly  vanishes  with  the  exhaustion  of  the  mines. 
In  these  jurisdictions  the  mines  must  pay  most  of  the  taxes  it 
matters  not  under  what  system  they  are  levied.  On  the  Mesabi 
range  of  IMinnesota  the  ii'on  mines  paid  in  1919  an  ad  valoi-em 
tax  amounting  to  92.643%  of  the  whole  tax  levy^  and  in  Michi- 
gan in  the  same  year  74.51%  of  the  taxes  levied  in  the  29  loeal 
jurisdictions  in  which  they  are  located.  The  same  relationships 
exist  in  the  IMichigan  copper  country  and  are  typical  of  many 
of  the  other  important  mining  centers  of  the  country. 

Now.  if,  in  the  Model  System,  the  ad  valorem  tax  on  mines 
is  abandoned  in  favor  of  a  tax  on  income  or  product  the  local 
eonimunity  will  lose  control  of  its  main  source  of  revenue  and 
in  lieu  of  the  ad  valorem  tax  it  will  receive  such  portion  of  the 
tax  on  income  or  product  as  may  be  prorated  to  it  by  the  state, 
and  this  poi'tion  will  be  an  annually  fluctuating  sum,  large 
in  periods  of  flush  production,  small  in  periods  when  the  mines 
are  operating  at  part  capacity  and  nothing  at  all  when  the 
mines  are  closed.  The  tax  paid  by  the  mines  would  bear  no 
relation  to  revenue  requirements.  Therefore,  in  periods  of 
idleness  or  low  production  or  low  income  the  main  burden  of 
the  taxes  would  fall  on  other  property  for  the  income  of  the 
community  itself  depends  on  the  operation  of  the  mines  and  it 
follows  that  the  personal  income  tax  would  fail  with  the  mines 
tax.2  The  effect  would  be  that  the  tax  rate  on  other  property 
would  be  controlled  largely  by  the  amount  of  the  mines  tax  and 
personal  income  tax  and  would  fluctuate  upward  and  down- 
ward inversely  with  the  productivity  of  these  taxes.  In  certain 
periods  the  tax  rate  on  property,  not  including  mines,  w^ould 
be  too  great  to  be  withstood  and  in  others  it  is  conceivable  that 
no  tax  would  need  to  be  levied  on  such  property.  Certainly 
there  could  be  no  curi'ent  equalization  of  the  taxes  on  mines 
and  other  real  estate  and  of  course,  therefore,  none  in  the  long 
run,  for  a  moment's  thought  is  sufficient  to  reveal  not  only 
the  political  difficulties  in  the  way  of  frequent  revisions  of  the 
tax  rate  on  the  income  or  product  of  the  mines  but  also  the 
variables  in  the  equation  which  in  themselves  would  defeat  a 
fair  solution  of  the  problem. 


(1)  In  this  state  mines  are  assessed  for  taxation  at  50%  of  cash 
value,  urban  property  at  40%  and  rural  property  at  33  1-3%. 

(2)  It  is  assumed  that  under  any  system  of  proration  of  the  per- 
sonal income  tax  by  the  state  the  local  jurisdiction  would  not  receive 
at  the  most  more  than  the  sum  originating  within  it. 


SPECIAL  REVENUE  COMMISSION  195 

II. 

It  should  not  be  forgotten  in  discussions  of  mines  taxation 
that  the  interests  of  the  local  taxing  jurisdictions  are  para- 
mount in  any  system  of  taxation  devised  for  the  American 
state.  The  bulk  of  the  public  expenditures  is  not  made  by  the 
state  or  by  the  sate  and  counties  combined,  but  by  the  cities, 
villages,  towaiships,  school  districts,  and  local  jurisdictions  of 
other  descriptions.  The  tax  on  property  has  been  the  mainstay 
of  the  local  community,  it  would  be  under  the  proposed  Model 
System.  Whatever  may  be  the  merits  of  the  taxes  based  on  the 
production  or  on  the  income  of  mines  from  the  viewpoints  of 
the  state  and  the  mine  owner,  they  are  ill  adapted  to  the  re- 
quirements of  the  local  communities.  The  necessary  control  of 
the  rates  of  such  taxes  by  the  state  deprives  the  local  mining 
jurisdiction  of  the  control  over  its  own  finances  to  an  em- 
barrassing degree  and  imposes  on  it  a  tax  system  which  would 
starve  the  treasury  in  some  periods  and  flush  it  in  others.  Those 
who  arc  familiar  with  local  finances  and  local  politicians  will 
hesitate  to  pronounce  which  is  the  greater  evil,  an  empty  treas- 
ury or  a  great  surplus. 

The  property  tax  is  the  elastic  element  in  the  Model  Sys- 
tem; if  mines  are  excluded  from  its  provisions  the  elastic  ele- 
ment Vidll  practically  disappear  in  the  typical  mining  juris- 
dictions Avh(  re  the  value  of  the  mines  comprehends  from  fifty 
to  ninety-five  per  cent  of  the  value  of  all  property. 

III. 

We  believe  that  mines  should  be  taxed  for  revenue  only 
and  condemn  the  super-taxation  of  mines  on  the  one  hand  and 
on  the  other,  exemption  or  under-taxation.  A  classification 
of  real  estate  for  taxation  opens  the  door  to  exploitation  of  the 
numerically  weaker  elements  in  the  population  by  the  domi- 
nant elements.  Witness,  Minnesota.  In  this  state  agriculture  is 
predominant.  Under  the  constitutional  amendment  of  1907  the 
legislature  decreed  that  real  estate  should  be  assessed  for  tax- 
ation as  follows : 

Rural  lands  and  farms  33  1-3%  of  cash  value. 
Urban  property  40%  of  cash  value, 
Mining  property  50%  of  cash  value. 

Why  the  legislature  stopped  at  33  1-3%  on  rui-al  laiuls 
and  farms  is  not  apparent  to  us;  nor  do  Ave  find  any  reason 
why  city  property  and  mines  should  pay  more  taxes  in  ]n'()- 
portion  to  value  than  rural  proixTly.     On  two  occasions  since 


196  REPORT  OF  THE  NEW  MEXICO 

1907  the  mines  escaped  additional  super-taxation  in  the  form 
of  a  production  tax  1hrous>b  the  action  of  the  Governor  in  inter- 
posing his  veto.  The  developments  in  Minnesota  should  be 
carefully  pondered  by  those  who  Avould  give  into  the  hands  of 
the  state  legislatures  the  power  of  classification  of  real  estate 
for  taxation  thi-ough  conslilulional  amendment.  The  prevail- 
ing constitutional  rule  of  unifoi-mity  so  far  as  it  applies  to  real 
estate  is  a  wholesome  restraint  on  the  misuse  of  legislative 
power  by  a  dominant  element  or  class  and  in  our  opinion  it 
should  be  carefully  guarded  in  all  pi'oposed  amendments  which 
purpose  only  the  exclusion  of  intangible  and  personal  property 
from  the  application  of  this  rule. 

On  the  other  hand  it  appears  that  in  certain  of  the  states 
where  the  mining  element  of  the  population  is  relatively  much 
stronger  numerically  and  politically  than  in  Minnesota,  legis- 
lative devices  have  been  found  to  ease  the  tax  burden  on  mines 
at  the  expense  of  other  property.  The  root  of  the  trouble  in 
these  states,  as  in  Minnesota,  is  not  to  be  ascribed  entirely  to 
human  selfishness.  Under  the  tax  systems  prevailing  today  in 
nearly  all  of  the  states,  the  burden  falls  with  crushing  Aveight 
on  real  estate  and  other  visible  pioperty,  mainly  on  real  estate. 
It  is  partly  because  real  estate  is  over-taxed  nearly  everywhere 
that  we  find  the  owners  of  it  arrayed  class  against  class,  as  in 
iMinnesota.  This  is  one  of  the  social  results  of  the  failure  of 
the  general  property  tax  to  spread  the  burden  fairly  and  equi- 
tably. It. is  the  outstanding  merit  of  the  Model  System  that 
all  able-to-pay  elements  of  the  population  will  be  reached  and 
fairly  taxed. 

IV. 

Not  including  the  students  of  taxation  as  such,  the  critics 
of  the  taxation  of  mines  under  the  ad  valorem  system  at  the 
same  level  as  other  real  estate  may  be  divided  into  two  classes, 
viz.,  those  who  believe  the  yield  is  relatively  too  low  and  those 
who  believe  it  is  i-elatively  too  high.  There  are  of  course  vari- 
ous shades  of  opinion  in  both  classes.  In  the  first  class  are  at 
one  extreme  the  proponents  of  public  ownership  of  mineral 
wealth  and  at  the  other  those  who,  adhering  to  the  institution 
of  pi'ivate  propei-ty  in  minei-als,  would  assert  a  public  equity 
in  mineral  deposits  beyond  that  which  is  satisfied  by  taxation 
for  revenue  only.  In  the  second  school  are  included  those 
whose  contactwith  mining  has  impressed  them  with  its  finan- 
cial hazards  and  unceilaiiilies.  They  believe  that  mines  should 
be  set  apart  from  other  property  for  taxation  at  a  lower  level 
and  that  prospects  and  idle  mines  should  not  be  taxed  at  all, 
with  the  end  in  view  of  encouraging  investment  in  mining  en- 


SPECIAL  REVENUE  COMMISSION  197 

terprises  pai'ticularly  neAv  enterprises  on  which  depends  the 
maintenance  of  mineral  production.  We  find  that  here  one 
of  these  schools  and  there  another  has  influenced  the  action  of 
state  legislatures  or  furnished  an  issue  for  political  campaigns. 
This  committee  harbors  no  distination  in  theory  between 
the  various  forms  of  property  for  taxation.  We  would  depart 
from  the  rule  of  uniformity  so  far  as  considerations  of  expe 
diency-  and  practicality  based  on  experience  demand.  The  ex- 
emption of  invisible  or  intangible  property  in  the  Model  Sys- 
tem, while  maintaining  the  tax  on  other  property,  is  a  conces- 
sion to  human  weakness,  insurmountable  administrative  as  well 
as  economic  difficulties  and  other  difficulties  attaching  to  the 
political  organization  of  a  federal  government.  But  there  are  no 
such  insurmountable  obstacles  in  the  way  of  taxing  mines  as 
other  real  estate  is  taxed  and  we,  therefore,  believe  that  the 
rule  of  uniformity  should  govern.  Subsidies  on  the  one  hand 
and  penalties  on  the  other  administered  to  industry  through 
the  devices  of  taxing  is  a  dangerous  perversion  of  the  taxing- 
power  of  the  state.  It  is  opposed  to  inter-state  comity  in  tax- 
ation, fostered  in  the  provisions  of  the  Model  System,  and  in- 
troduces an  unnatural  disturbing  element  in  the  economies  of 
the  internal  commerce  and  development  of  the  country. 

V. 

This  discussion  has  proceeded  on  the  assumjjtion  that  mines 
and  other  real  estate  will  be  subject  to  both  slate  and  local 
taxation.  It  is  not  conceivable  that  the  local  jurisdiction  can 
dispense  with  the  ton  mines  for,  as  we  have  i^ointed  out. 
the  mines  constitute  the  bulk  of  the  taxable  value  and  furnish 
directly  and  indii'cctly  the  support  of  the  great  nuijority  of  the 
people  in  the  typical  mining  jurisdiction.  Should  the  state 
abandon  the  property  tax  the  principle  of  the  equalization  of 
the  tax  on  mines  with  that  on  other  real  estate,  laid  down  by 
the  Committee  on  Model  System,  would  require  that  it  also 
abandon  the  tax  on  mines. 

It  has  been  argued  in  certain  state  legislatures  and  in  po- 
litical campaigns  in  some  stales  that  the  pro])erty  lax  on  mines 
should  inure  to  the  local  juiisdiction  only,  the  stale  levying  its 
tax  on  product  or  income.  It  may  be  observed  tluil  this  plan 
has  found  support  in  some  instances  among  those  who  desire 
super-taxation  of  mines,  and  in  others  among  those  who  seek 
to  ease  the  burden  on  mines  at  the  exjx'nse  of  oilier  properly. 
It  has  also  been  supported  by  those  who  would  nlunuloii  Jhe 
property  tax  entirely  for  state  purposes.  Whatever  the  view- 
point from  which  this  dual  tax  is  snppoi-ted,  the  plan  is  op- 
posed, if  not  by  design,  certainly  in  its  results,  to  the  e(|uali/a- 


198  REPORT  OF  THE  NE  WMEXICO 

tiou  of  taxes  on  luinos  with  thoso  on  other  real  estate  and  is, 
iherel'or,  not  commended.  A  second  not  less  inipoi-tant  i-eason 
for  opposini?  this  dnal  syslem  is  that  the  interest  of  the  state  in 
an  equitable  administration  of  the  ad  valorem  tax  on  mines 
depends,  obviously,  largely  on  its  participation  in  the  revenue. 

VI. 

We  believe  that  ad  valorem  taxation  of  mines  by  state 
and  local  jurisdictions  under  direct  administration  by  a  State 
Tax  Commission  or  Tax  Commissioner  is  a  thoroughly  prac- 
tical method  of  taxing  mineral  wealth.  We  are  not  unmindful 
of  the  difficulties  besetting  the  administration  of  such  a  tax. 
If  the  assessments  are  made  by  toAvnships,  city,  and  village 
assessors,  it  cannot  be  operated  satisfactorily.  But  the  Model 
System  contemplates  a  State  Tax  Commission  or  Tax  Commis- 
sioner in  every  state  Avith  pov^^er  of  original  assessment  of  cer- 
tain property  and  presumably  with  power  to  maintain  such 
expert  assistance  as  may  be  necessary. 

Such  a  centralized  administration  is  indispensable,  for  a 
satisfactory  administration  of  the  ad  valorem  tax  on  nunes. 
"What  has  already  been  done  under  centralized  administration 
in  Michigan,  Wisconsin,  Minnesota,  and  Arizona,  can  be  done 
in  other  states.  We  believe  that  those  Avho  ascribe  the  success 
of  the  system  in  these  states  to  the  character  of  the  mines  more 
than  to  central  administrative  control  are  misinformed.  Every 
problem  of  assessment  and  administration  that  could  conceiv- 
ably arise  anywhere  occurs  in  principle  in  the  application  of 
the  system  in  these  states.  They  have  all  been  satisfactorily 
met. 

It  is  true  that  the  appraisal  of  mining  property,  particu- 
larly certain  types  of  mines  and  partially  developed  mineral 
deposits  is  impossible  for  the  unskilled  assessor  and  not  easy 
for  the  trained  expert.  But  the  difficulties  in  these  states  have 
been  overcome  by  systematic  investigations  and  study  carried 
on  from  year  to  year.  In  Minnesota  there  is  a  liason  between 
the  Tax  Commission  and  the  School  of  Mines,  in  Wisconsin 
and  Michigan  between  the  Tax  Commission  and  the  Geological 
Survey.  Into  the  hands  of  these  experts  is  given  complete 
operating  records  o  fthe  mines,  mine  maps  and  all  other  data 
in  the  hands  of  the  mine  operators.  All  of  this  is  supplemented 
by  examinations  on  the  ground  and  friendly  co-operation  of 
the  operators.  Every  consideration  and  evidence  affecting 
values  is  explored  and  weighed.  Confidence  and  good  will 
govern  the  relations  of  the  state  officials  and  the  operators. 

Approved  methods  of  determining  mining  values  for  tax- 
ation should  not  differ  in  principle  from  those  used  in  ordi- 


SPECIAL  REVENUE  COMMISSION  199 

nary  commercial  transactions,  for  whatever  a  property  is  worth 
commercially,  it  should  also  be  worth  for  taxation.  We  are 
using  the  term  mine  in  a  broad  sense  to  include  not  only  mines 
as  they  are  commonly  thought  of  but  also  oil  and  gas  wells, 
all  non-metallic  minerals  such  as  limestone,  salt,  gypsum,  clay, 
etc.,  in  short  all  mineral  bodies  which  are  valuable,  irrespective 
of  whether  they  are  quarried,  pumped,  or  mined,  and  of  course 
the  existing  appurtenances  for  exploiting  them.  The  method  of 
valuation  for  taxation  will,  of  course,  vary  in  detail  with  the 
character  of  the  properties  and  perhaps  also  with  the  means  at 
the  disposal  of  the  Tax  Commission  or  Tax  Commissioner.  But 
the  value  sought  should  be  the  amount  which  the  mine  should 
command  in  the  event  of  sale  at  the  time  of  assessment.  This 
is  the  ordinary  rule  governing  the  assessment  of  other  real 
estate.  In  this  connection  we  may  add  that  prescription  by 
state  legislatures  of  formulae  for  the  valuation  of  mines  is  a 
usurpation  of  an  important  function  of  the  Tax  Commission  or 
Tax  Commissioner  and  in  its  results  is  opposed  to  th  eprinciple 
of  equalization  of  the  taxes  on  mines  and  other  real  estate. 
A  study  of  the  mines  in  any  state  will  suggest  to  a  competent 
Tax  Commission  or  Tax  Commissioner  practical  and  equitable 
methods  of  valuing  them  for  taxation. 

It  is  characteristic  of  mining  property  that  its  value  fluctu- 
ates from  year  to  year,  in  many  types  in  startling  suddenness 
and  amount.  We  contemplate  such  administration  as  will  main- 
tain contact  Avith  current  developments. 

A  common  objection  to  the  ad  valorem  tax  is  that  idle 
mines  -will  be  taxed.  In  our  opinion  they  ought  to  be  taxed 
if  the  are  valuable.  There  is  no  more  reason  why  idle  mines 
should  be  relieved  of  taxes  than  non-productive  property  gen- 
erally should  be.  If  a  mine  is  idle  there  is  in  the  ordinary  case 
a  reason  for  it  of  a  nature  to  depress  the  value  far  below  what 
it  would  be  were  the  property  in  operation,  but  so  long  as  the 
mine  has  sale  value,  that  value  should  be  the  measure  of  its 
reialixely  tax  so  long  as  other  real  estate  is  similarly  treated. 

Neither  are  we  impressed  with  the  often  voiced  opinion 
that  an  ad  valoremn  taxation  for  revenue  only  at  the  same  level 
as  other  real  estate  restrains  to  a  too  serious  extent  the  develop- 
ment of  ore  reserves  in  advance  of  current  reqniT-omnts  and  dis- 
courages exploration  for  and  development  of  new  mines.  ]\lin- 
ing  development  in  Arizona  has  not  been  perceptibly  repressed 
by  the  ad  valorem  tax.  In  Michigan,  Wisconsin  and  Minnesota, 
the  reserves  of  iron  ore  now  estimated  at  abont  2,000,000.000 
tons,  or  a  thirty  years'  sujiply  at  the  ])resent  rate  of  shii)ni('nl, 
have  been  built  up  by  exploration  despite  this  tax.  After  all,  the 
tax  is  merely  an  element  of  cost  and  will  be  reel^oncd  witb  pre- 
cisely as  other  costs  arc    The  nnnoi-  nntiii-nlly  will  t-onduet  his 


200  REPORT  OF  THE  NEW  MEXICO 

operations  al  \hv  lo^vost  possible  eosl  but  il'  he  neglects  to 
develop  his  reserves  in  advance  of  the  needs  of  the  moment,  his 
ultimate  loss  is  bound  to  exceed  many  fold  the  saving  in  taxes. 
The  experience  in  Michigan,  IMinnesota  and  Arizona  warrants 
the  dismissal  of  this  objection. 

It  is  often  urged  in  favor  of  a  tax  on  inconu'  oi-  ])roduct 
that  ore  in  the  ground  is  taxed  (under  the  ad  valorem  sys- 
tem) year  after  year  until  it  is  mined  and  sold  so  that  the 
heaviest  tax  is  paid  by  the  mineral  of  least  present  value  or 
that  which  is  last  mined.  Of  course,  there  is  no  pyramiding  of 
taxes  on  unnnned  mineral  as  an  actual  fact  of  accounting  and 
financing.  Obviously,  all  charges  in  excess  of,  or  advance  of 
income,  are  capitalized  and  taxes  are  no  exception.  Taxes,  like 
opei'ating  costs  ,are  chai-geable  against  the  income  of  the  year 
aiul  are  so  disposed  of  as  a  practical  matter.  It  is  true  of 
course,  that  taxes  on  idle  mines  may,  in  certain  cases,  amount 
to  a  formidable  deferred  chai-ge  against  the  unmined  mineral 
but  in  this  we  find  no  reason  for  the  exemption  of  idle  mines 
from  taxation  so  long  as  other  non-productive  property  must  be 
taxed.  The  income  tax,  the  specific  tax  on  product  and  the 
gross  receipts  tax,  would  of  coui-se,  relieve  the  idle  mines.  From 
the  standpoint  of  the  taxpayer,  and  from  the  administrative 
standpoint  as  A\'ell,  the  income  tax  is  to  be  preferred  to  an  ad 
valorem  tax;  the  taxpayer  would  doubtless  prefer  even  the 
tax  on  production  or  gross  receipts  if  the  rates  are  nominal  and 
such  taxes  are  admittedly  easy  to  administer.  But,  as  we 
have  said,  taxes  such  as  these  are  not  adapted  to  the  local  juris- 
dictions and  are  opposed,  as  a  practical  matt(M',  to  the  principle 
of  equalization  of  the  taxes  on  mines  and  other  real  estate. 

Summary : — Summarizing  the  recommendations,  your  com- 
mittee approves  the  principle  of  equalization  of  taxation  of 
mir.es  and  othei'  real  estat(\  opposes  the  classification  of  real 
estate  (including  mines)  for  taxation  at  different  levels,  oi-  by 
different  methods,  and  advises  the  inclusion  of  the  ad  valorem 
system  of  mines  taxation,  under  centralized  state  authority  and 
control,  in  the  Model  System  of  State  and  Local  Taxation. 


SPECIAL  REVENUE  COMMISSION  201 

APPENDIX  IV. 

ASSESSMENT  AND  TAXATION  OF  MINES 
AND  MINERAL  LANDS. 

The  producing  mines  in  New  Mexico  are  practically  all 
found  in  six  of  the  twenty-nine  counties  of  the  state,  Colfax, 
Grant,  Hidalgo,  McKinley,  Santa  Fe  and  Socorro.  In  certain 
years  such  mines  operate  on  a  small  scale  in  the  counties  of 
Dona  Alia,  Lincoln,  Luna,  Rio  Arriba,  San  Juan,  Sandoval, 
Sierra  and  Torrance.  Producing  coal  mines  are  found  in  Col- 
fax, McKinley,  Rio  Arriba,  San  Juan,  Santa  Fe  and  Socorro 
counties ;  producing  metal  mines  in  Colfax,  Dona  Ana,  Grant, 
Hidalgo,  Sierra  and  Socorro  counties.  Non-producing  mines 
and  mineral  lands  are  largely  confined  to  these  counties,  though 
some  developments  are  carried  on  in  two  or  three  other  coun- 
ties. The  assessed  value  of  all  mines  and  mineral  lands,  in- 
cluding surface  values  and  improvements  approximates  $35,- 
000,000  or  about  9%  of  the  total  assessed  valuation  of  the  prop- 
erty subject  to  tax  in  the  state  for  the  year  1919.  Of  this  total 
$15,711,536  is  the  assessment  upon  net  output,  representing  the 
value  of  the  mineral  content  in  lands  of  producing  mines.  The 
remainder  of  about  $19,000,000  includes  the  asssessed  value  of 
the  surface  and  improvements  of  both  producing  and  non-pro- 
ducing mines  and  mineral  lands  and  the  mineral  content  of 
non-producing  mines  and  mineral  lands. 

As  to  the  assessment  of  the  value  of  the  net  output  which 
is  shown  elsewhere  for  each  producing  mine  for  the  years 
1915-1919  inclusive,  the  folloAving  data  for  the  years  1918  and 
1919  will  be  of  interest.  In  the  year  1918,  forty-one  metal 
mines  showed  gross  earnings  of  $19,875,888.03  and  total  ex- 
penditures of  $15,486,713.14,  the  net  earning  being  $4,337,- 
473.71.  The  value  of  the  net  output  of  the  mines  for  that  year 
was  $13,346,903.00.  In  the  same  year  twenty-throe  coal  mines 
earned  a  total  of  $13,764,486.41  with  expenditui-es  amounting 
to  $11,649,228.18,  the  total  net  earnings  I)eing  $2,015,258.25. 
The  net  output  was  assessed  at  $3,745,352.00. 

For  the  year  1919,  seventeen  metal  mines  reported  aggre- 
gate earnings  of  $10,743,555.19  and  cxpenditui-es  amounting  to 
$11,711,909.58  a  loss  of  $968,354.39.  The  assessment  of  the  net 
value  of  the  output  of  the  seventeen  mines  was  $12,770,547.00. 
For  the  same  year,  sixteen  coal  mines  reported  gross  earnings 
totaling  $10,826,736.67  nnd  gross  expenditures  totaling  $9,713,- 
997.91,  the  net  earnings  being  $1,112.7:5H.72  while  the  net  out- 
put assessment  was  fixed  at  $2,940,989.00. 

Assuming  a  total  valuation  for  taxation  pni-poses  of  all 
mines  and  mineral  lands  with  surfaee  and  iiupfoveinent  v;ilues 


202  REPORT  OF  THE  NEW  MEXICO 

iiicludod  of  $35,000,000  it  is  estimated  that  the  mines  and  min- 
eral lands  pay  approximately  $700,000  in  taxes  for  state  and 
county  purposes  including  roads  and  schools,  or  about  8%  of 
all  taxes.  The  average  tax  rate  applying  to  mines  is  conserva- 
tively placed  at  2  per  cent.  The  commission  has  been  unable 
to  secure  full  information  as  to  taxes  paid  by  the  mines  of  the 
state,  as  only  a  few  of  the  larger  producing  mines  submitted 
adequate  data.  The  increase  in  revenues  arising  from  mine  tax- 
ation for  the  period  1915-1919  is  shown  in  the  following  table 
and  from  a  statement  giving  an  abstract  of  taxes  paid  by  the 
Chino  Copper  Company  (Appendix  XIX)  during  that  period. 

TAXES  PAID  BY  NINE  PRODUCING  MINES 

1915-1919. 

Name  of 

Company        County        1915  1916  191T  1918  1919 

Maxwell 

Land  Grant,  Colfax  $11,710.12  $13,3j3.15  $18,206.90  $15,062.96  $22,559.00 

Company 

St.  Louis 

Rocy  Mtn.       Colfax     28,331.11    26,588.60    53,133.76    59,255.42    76,805.79 

Pacific  Co. 

Phelps- 
Dodge  Corp.  Colfax     12,423.36     18,631.50    37,350.84     44,422.40     53,270.13 
Dawson 

Phelps- 
Dodge  Corp.    Grant        2,707.23     10,716.86    33,808.11    34,742.46    52,214.99 
Tyrone 

Chino 

Copper  Co.      Grant    104,105.77  142,246.68  181,345.07  177,186.86  327,439.10 

Diamond 

Coal  Co.     McKinley       1,065.68      1,154.39      2,120.64      5,298.46    10,188.44 

Cherokee  & 

Pittsburgh  Santa  Fe       4,417.15      4,510.31      6,802.44      7,479.26    10,172.40 

C.  &  M.  Co. 

Ozark 

Smelting       Socorro     2,765.79      2,328.52      4,097.48      4,-:i3.98 

and  M.  Co. 

American 

Silver  Socorro       5,649.43      4,945.68      3,776.42      2,721.81      5,771.90 

Corp. 


SPECIAL  REVENUE  COMMISSION  203 

APPENDIX  V. 

METHOD  OF  AD  VALOREM  ASSESSMENT  OF 
'      MINES  IN  MINNESOTA. 

The  fourth  biennial  report  (1914)  of  the  Minnesota  Tax 
Commission  contained  in  Chapter  VI,  Mines  and  Minerals,  a 
very  comprehensive  exposition  of  the  procedure  followed  in 
bringing  to  life  and  light  the  mineral  wealth  of  the  state. 
Therein  was  set  forth  the  methods  used  in  determining  and 
establishing  the  future  value,  the  discounted  or  present  value 
of  the  future  value,  and  finally,  the  taxable  value  of  the  realty 
containing  the  known,  developed,  measured  deposits  of  mer- 
chantable iron  ore  and  manganiferous  ore.  The  mineral  valu- 
ation system  originated  with  the  Commission  immediately  after 
its  creation  in  1907  and  was  explained  in  its  preliminary  re- 
port of  1907.  Each  biennial  report  of  the  commission  deals 
with  the  subjects  of  mineral  valuation,  and  explains  the  suc- 
cessive steps  taken  to  make  the  necessary  yearly  adjustments, 
changes,  increases,  etc.,  as  the  same  may  appear  necessary. 

The  mineral  wealth  of  the  state  is  so  great  and  of  s^uch 
increasing  importance  and  subject  to  so  many  changes  that 
the  mineral  department  of  the  tav  commission,  and  its  associ- 
ate consulting  mining  engineer,  the  Minnesota  School  of  Mines, 
are  constantly  at  work  obtaining  and  preparing  data  to  en- 
able the  commission  to  arrive  at  and  fix  the  full  value  of  this 
form  of  property.  Thus,  in  taxes,  does  this  class  of  property 
contribute  its  share  of  the  cost  of  state,  county  and  local  gov- 
ernment. 

Since  1907  the  tax  commission  has  made  a  constant,  con- 
tinuous study,  from  every  angle  and  viewpoint  of  the  mineral 
wealth  of  the  state.  It  has  studied  the  geology  of  the  ore  bear- 
ing districts,  and  through  the  diamond  drilling,  churn  drilling, 
test  pitting,  exploration  and  development  work,  the  commis- 
sion has  an  intimate  knowledge  of  the  known  developed  de- 
posits of  ore.  The  commission  knows  that  with  the  exi)loi-ation 
data  at  its  disposal  those  ore  bodies  can  be  definitely 
and  accurately  measured  and  the  tonnages  and  grades  of  ore 
known  sufficiently  close  fo"  all  practical  purposes.  Il  is  in 
constant  touch  with  the  newly  developed  ore  in  order  that  tlie 
same  may  be  placed  on  tlie  assessment  rolls.  In  like  manner 
it  keeps  itself  informed  of  the  opening  up  the  properties  for 
active  operations,  and  it  knows  of  necessary  revision  of  ex- 
ploration measurements  rerpiired  to  adjust  the  lonnagcs  to 
actual  conditions  disclosed  l)y  active  mining. 

Here,  then,  is  a  vast  tonnage  of  approximately  one  and 
one  half  billion   tons   of  iroTi    ore,    definitely  and   snfficiently 


204  REPORT  OF  THE  NEW  MEXICO 

known  for  all  practical  purposes.-  Much  of  it,  indeed  most  of 
it,  Avili  not  be  mined  and  shipped  to  its  mai-ket  for  many  years. 
It  is  of  various  grades  and  it  is  at  present,  or  will  be  in  the 
future,  mined  in  various  ways.  Most  of  it  will  be  mined  and 
shipped  in  its  native,  natural  condition;  some  will  have  to 
be  Avashed  to  eliminate  the  sand,  and  some  will  have  to  be 
dried  to  extract  the  excess  water.  Various  forms  of  benefici- 
ation  Avill  have  to  be  usesd  to  concentrate  and  convert  a  low 
grade  ore,  or  an  "ore  material"  into  merchantable  ore  that 
can  be  produced  and  delivered  to  the  market  at  a  commercial 
profit. 

Notwithstanding  all  these  seemingly  conflicting  and  con- 
fusing factors,  the  value  according  to  grade  of  tonnage  con- 
tained in  each  of  the  several  hundred  developed  ore  deposits 
can  be  easily  ascertained  for  taxation  or  any  other  purpose  of 
valuation.  Thus  as  long  as  any  of  it  remains  in  the  ground, 
as  long  as  it  has  value,  present  or  future,  the  realty  containing 
the  same  contributes  its  taxes  to  the  support  of  state,  county 
and  local  government. 

The  amount  of  taxes  naturally  depends  upon  the  tax  rate 
each  year  established  by  state,  county  and  local  authorities 
and  levied  against  the  assessment  of  each  description  of  realty 
containing  a  deposit  of  merchantable  ore. 

There  is  absolutely  no  difference  between  the  future  value 
of  ores  of  equal  grade  whether  contained  in  an  active  shipping- 
deposit  or  contained  in  an  inactive  reserve  deposit,  without 
mining  developments  of  any  kind,  and  that  may  not  be  touched 
for  years  to  come.  There  is,  however,  a  very  great  difference 
in  the  present  value  of  two  such  deposits. 

The  active  shipping  deposit  will  have  for  mining  a  short 
exhaustion  period,  and  a  short  discount  term  must  be  used  to 
determine  the  commuted  or  present  value  of  its  total  future 
value. 

The  inactive  reserve  deposit  will  have  for  mining  a  long 
exhaustion  period  and  a  long  discount  term  must  be  used  to 
determine  the  commuted  or  present  value  of  its  total  future 
value. 

Here  we  reach  the  point  where  the  procedure  may  be  for- 
mulated by  which  the  ad  valorem  value  may  be.  ascertained 
and  fixed  upon  the  many  deposits  and  various  grades  of  iron 
ore. 

We,  therefore,  use  a  common  sense,  practical  application 
of  the  well  established  law^  of  general  averages,  and  of  standard 
governmental  statistical  periods  of  five  or  ten  years,  both  as 
to  the  price  of  ore  delivered  on  the  market  and  as  to  the  costs 
of  production  and  delivery.  We  are  dealing  with  lo^cr  +imf 
values,  so  that  prices  and  costs  excessively  or  abnormally  high 


SPECIAL  REVENUE  COMMISSION  205 

or  low  must  be  avoided.  What  is  desired  are  general  averages 
of  prices  and  costs  that  fairly  represent  present  or  prospective 
future  normal  conditions. 

Many  checkings  since  1907  by  the  tax  commission  have 
demonstrated  that  the  law  of  general  averages,  when  intelli- 
gently applied,  produces  results  very  close  to  actual  conditions 
subsequently  found  to  exist.  Moreover,  the  commission  is  safe- 
guarded through  knowledge  of  current  conditions  as  they  may 
appear,  in  its  consideration  of  the  annual  equalization  of  the 
mineral  assessment.  To  meet  such  changed  conditions  the 
commission  made  general  raises  in  the  mineral  assessment  of 
5  per  cent  in  each  of  the  years  1910,  1912  and  1914,  and  the 
1914  raise  was  made  to  place  iron  ore  on  a  basis  of  50  pei'  cent 
of  its  full  value  in  compliance  with  the  newly  enacted  taxation 
law  classifying  assessments. 

Royalty  paid  to  the  fee  owner,  which  must  come  out  of 
operating  profit  and  consume  some  or  all  of  such  profit,  has 
nothing  to  do  with  the  value  of  iron  ore  for  the  purpose  of 
taxation,  and  is  excluded  by  the  commission  from  costs  or 
general  averages  of  production  and  delivery. 

Here,  then,  is  the  application  of  the  law  of  general  aver- 
ages in  determining  the  present  taxable  value  of  the  total 
tonnage  of  ore  in  any  given  deposit,  and  of  a  general  average 
grade  as  disclosed  by  an  analysis  of  every  five  feet  of  explora- 
tion drilling. 

Ascertain  what  an  ore  of  such  a  grade  has  sold  for  per 
ton  on  the  open  market  over  a  standard  statistical  period  of 
five  or  ten  years,  and  calculate  its  general  average  niarket 
price.  If  such  calculated  general  average  market  price  does 
not  fairly  represent  what  should  be  a  close  approximation  to 
present  and  possible  future  market  price  conditions,  then  an 
arbitrary  adjustment  must  be  made  to  fix  a  price  that  Avill 
represent  such  conditions.  In  this  manner  a  market  value  can 
be  obtained  on  great  tonnages  of  even  low  grade  ores  that  in- 
dividually have  no  value,  but  receive  pro  rata  value  through 
mixture  with  other  high  grade  ores.  The  geiiei-al  average 
grade  of  the  mixture  being  of  commercial  grade  and  accepablc 
to  the  blast  furnace  for  conversion  into  pig  iron. 

The  next  step  is  to  ascertain  llie  total  cost  per  Ion  (ex- 
clusive of  royalty)  of  producing  and  dclivci-ing  such  an  ore 
to  the  market  (Lower  Lake  docks)  over  a  slundai-d  statistical 
period  of  five  or  ten  years,  and  calculate  its  general  average 
cost. 

If  such  calculated  general  average  cost  docs  not  fairly 
represent  what  should  hv  a  close  approximation  to  present  and 
possible  future  cost  conditions,  then  an  arbitrary  adjustmont 
must  be  made  to  fix  a  cost  that  will  represent  such  conditions. 


206  REPORT  OF  THE  NEW  MEXICO 

The  next  step  is  to  deduct  from  the  determined  genei-al 
average  market  price  per  ton  the  determined  general  average 
total  costs  of  production  and  delivery  per  ton.  The  difference 
is  the  gross  opei-ating  full  value  per  ton,  and  represents  the 
future  full  value  per  ton  of  the  total  tonnage  in  the  deposit. 

No  deposit  can  be  mined  out  all  at  once.  It  takes  a  great 
many  years  of  mining  and  shipping  to  exhaust  some  mines.  A 
comprehensive  study  of  minhig  operations  of  the  past  enables 
one  to  make  a  close  approximation  of  the  exhaustion  of  known 
ore  deposits  and  what  term  of  years  can  be  safely  taken  as  the 
discount  period.  A  safe  commercial  rate  of  interest  that  rep- 
resents the  present  and  possible  future  worth  of  money  must 
then  be  taken. 

Thus  we  have  the  desired  determining  voluation  factors: 
(1)  the  future  full  value  per  ton,  (2)  the  future  discount 
period  (ore  exhaustion),  and  (3)  the  rate  of  interest  to  use 
for  discount. 

When  we  discount  the  future  full  value  per  ton,  for  the 
ore  exhaustion  period,  at  the  rate  of  interest  taken,  the  result 
is  the  present  full  value  per  ton.  Fifty  (50)  per  cent  of  that 
amount  is  the  taxable  value  per  ton,  as  iron  ore  is  assessed  at 
50  per  cent  of  its  full  value.  When  the  total  tonnage  to  be 
mined  in  the  future  is  multiplied  by  the  ascertained  taxable 
value  per  ton,  the  result  is  the  present  taxable  vaue  of  the 
total  tonnage. 

As  a  matter  of  fact  this  is  the  only  logical  method,  after 
including  royalty,  to  be  followed  by  any  operator  who  desires 
to  anticipate  and  capitalize  the  future  expected  net  operating 
profit,  through  a  bond  issue  secured  by  a  mortgage  on  the 
property  containing  an  iron  ore  deposit.  He  has  only  an 
equity  in  the  value,  the  net  operating  profit.  The  limit  of 
the  bond  issue  is  fixed,  as  such  equity  must  produce  the  re- 
quired interest  as  due  and  the  payment  of  the  principal  at 
maturity. 

Among  the  items  of  costs  of  production  and  delivery 
considered  by  the  conmiission,  to  arrive  at  net  taxable  values, 
are:  mining  labor,  loading,  unloading  and  dockage,  rail  freight, 
lake  freight,  mining  supplies,  concentration,  insurance  and 
brokerage,  administration,  taxes,  etc. 

To  illustrate  the  procedure,  assume  a  good  grade  of  ore 
will  average  $4.00  per  ton  delivered  at  Lower  Lake  ports,  and 
that  the  general  average  of  production  and  delivery  costs  (ex- 
clusive of  royalty)  will  be  $3.00  per  ton ;  the  difference  $1.00 
per  ton  represents  the  future  full  value  per  ton  of  the  total 
tonnage  in  the  deposit.  Assume  that  it  will  require  20  years  to 
exhaust  the  deposit  and  to  obtain  the  total  full  value  of  the 
total  deposit  and  assume  that  money  is  woj-th  8%  ;  the  present 


SPECIAL  REVENUE  COMMISSION  207 

value  of  $1.00  per  ton  per  amiuni  for  20  years  at  8%  interest 
is  $0,505,  and  50%  thereof,  or  $0.25,  is  the  present  taxable 
value. 

A  thorough  investigation  disclosed  the  extent  and  charac- 
ter of  various  deposits  of  the  Mesabi  and  Vermilion  Ranges, 
and  since  1914  of  the  Cuyuna  Range,  and  on  account  of  these 
deposits  containing  ore  of  various  equal  general  average  grades 
and  with  similar  present  or  future  open  pit  or  underground 
mining  operation,  they  almost  automatically  segregate  them- 
selves into  twelve  classes,  with  (1)  three  groups  of  active  or 
present  open  pit  mining,  (2)  three  groups  of  reserve  or  future 
open  pit  mining,  (3)  three  groups  of  present  active  under- 
ground mining,  and  (4)  three  groups  of  reserve  or  future 
underground  mining. 

While  the  classes  and  rate  per  ton  are  of  great  convenience 
for  use  in  adjustments  to  meet  actual  values,  there  is  nothing 
sacred  or  final  about  them.  Regardless  of  conveniently  termed 
"active  mine  rate"  and  "reserve  rate",  any  rate  appearing  in 
such  a  wide  range  of  rates  that  can  and  will  produce  the  re- 
quired and  desired  valuation  is  freely  used  by  the  commission 
whenever  necessary.  The  large  amount  of  reserve  ore  assessed 
at  low  rate  on  account  of  very  long  exhaustion  periods,  is  in 
that  class  only  temporarily.  Many  such  properties  each  year, 
as  they  are  developed  for  active  mining,  are  re-rated  and  the 
rate  is  increased  to  the  proper  class  in  which  they  enter. 


208  REPORT  OF  THE  NEW  MEXICO 

appp:ndix  \  I. 

REPORT  OF  BOARD   OF  STATE  TAX  COMMISSIONERS 
AND  STATE  BOARD  ASSESSORS,  MICHIGAN 

1917-1918 

The  Board  of  State  Tax  Coinniissionors  annually  i-eviews 
the  assessment  of  iron  mining  properties,  thus  extending  a 
closer  supervision  over  that  class  of  property  than  over  any 
other  class  except  public  'utilities.  The  reason  for  this  is  that, 
while  the  fluctuation  in  the  total  value  of  all  iron  mining  prop- 
erties in  the  state  may  be  small,  there  may  be  at  the  same 
time  enormous  fluctuations  in  the  value  of  individual  proper- 
ties. The  value  of  every  mine  is  in  the  ore  it  contains.  A 
shipping  mine  is  a  diminishing  asset,  decreasing  annually  in 
value  according  as  ore  is  shipped,  eventually  reaching  zero. 
Exploration  and  development,  however,  are  continually  going 
on  and  frequently  disclose  ore  l)odies  not  previously  known 
both  in  existing  mines  and  in  undeveloped  territory.  The  extent 
and  richness  of  these  new  ore  bodies  must  be  determined  by 
a  competent  mining  engineer  and  the  value  computed  for  as- 
sessment purposes.  The  grade  and  quality  of  ore  are  subject 
to  frequent  change,  as  also  are  the  trade  conditions  of  the  iron 
and  steel  industry  upon  Avhich  depends  to  a  large  extent  the 
value  of  iron  ore  as  the  raw  material  of  such  industries.  The 
mining  industry  also,  in  assessing  districts  in  which  located, 
generally  ovei'shadows  all  others  in  impoi'tance,  often  exceeding 
in  amount  the  combined  value  of  all  other  property.  The  pop- 
ulation in  such  district  is,  to  a  large  extent,  directly  or  indirect- 
ly, dependent  on  the  mining  industry  for  support,  thus  making 
possible  to  a  greater  degree  than  elsewhere  political  and  eeo- 
nonuc  control  of  local  public  affairs,  including  assessment  and 
taxation.  Local  assessing  officers,  also,  are  not  always  com- 
petent through  experience  or  education  to  properly  apply 
scientific  principles  of  mining  valuations.  Because  of  these 
reasons  the  Board  of  Stale  Tax  Connnission(>7's  has,  since  1912, 
annually  reviewed  the  assessment  of  iron  mining  properties. 

The  method  of  assessing  mining  property,  which  has  come 
to  be  known  as  Ihe  "Michigan  System  of  Mine  Appraisal", 
and  which  has  been  adopted  in  \\hole  or  in  part  by  other  states, 
is  an  outgrowth  of  Ihe  method  made  use  of  by  Mining  Engineei- 
J.  R.  Finlay,  in  191J,  in  his  work  for  the  state,  modified  in 
its  application  by  State  (leologist  R.  C.  Allen  appraiser  of 
mines  for  the  Tax  Commission,  so  as  to  meet  assessment  re- 
quirements and  in  other  respects  where  shown  desirable  by 
experience. 


REPORT  OF  THE  NEW  MEXICO  2U9 

Stated  in  the  briefest  manner :  The  value  of  an  iron  mine 
is  the  present  worth  of  the  sum  of  money  representing  the 
calculated  difference  between  the  amount  received  from  ore 
sales  and  the  cost  of  mining  and  marketing  the  ore,  figured 
on  the  entire  tonnage  which  the  mine  may  be  expected  to 
produce.  The  total  net  profits,  in  other  words,  reduced  to 
present  worth,  not  allowing  as  items  of  operating  expense, 
royalties  and  costs  of  general  exploration  work. 

The  calculation  is  the  product  of  three  factors: 

First :    Total  tonnage  of  available  ore  ; 

Second,  average  annual  excess  per  ton  of  receipts  over 

actual  cost  of  operation. 
Third:  The  prsent  worth  of  one  dollar  that  is  to  be 

paid  in  equal  annual  installments  for  a  period  of 

years  corresponding  to  the  productive  life  of  the 

mine. 

For  the  purpose  of  determining  the  first  two  factors  each 
mining  operator,  whether  an  individual  or  a  corporation  is 
required : 

First :  To  make  to  the  Board  of  State  Tax  Commis- 
sioners, on  forms  especially  prepared  for  the  pur- 
pose, a  report,  duly  executed  before  a  notary 
public,  showing  the  financial  statement  of  the  op- 
eration of  each  mine  or  mining  property  owned, 
operated  or  controlled  by  such  operator,  covering 
the  period  of  the  preceding  five  years. 

Second:  To  furnish  a  complete  set  of  mining  maps 
showing  each  mine  level,  cross  section,  recoi-d  of 
drill  holes,  pits,  shafts,  etc.;  also  a  map  showing 
boundaries  of  each  property,  and  the  relation 
of  the  ore  bodies  to  other  mining  pi-opertics ;  all 
maps,  plats,  records  etc.,  are  i-equired  1o  l)c 
signed,  dated  and  duly  executed  by  the  operatoi- 
or  a  responsible  officei-  of  Hie  company. 

The  State  Geologist  and  his  assistant,  who  is  a  compel eiil 
mining  engineer,  annually  examine  each  mining  properly 
above  and  below  ground,  for  the  purpose  of  checking  up  Ili<" 
information  furnished  and  for  obtaining  such  olhcr  da1;i  as  may 
have  a  bearing  upon  values.  From  llx'se  reports  and  pei'sonal 
examinations  the  total  tonnage  and  the  annual  excess  per  ion 
of  receipts  over  actual  costs  of  operation  is  (Icl.rmuied. 

In  figuring  the  tonnage  not  only  ore  m  sight  or  (levc1o])r<l 
ore   is  considered,   but   prospective   ore     The   amount   of   de- 


210  REPORT  OF  THE  NEW  MEXICO 

velopcd  oi'e  in  producing  mines  may  be  calculated  with  com- 
parative ease :  but  the  amount  of  prospective  ore  can  only  be 
dotormined  tTora  geological  conditions,  mining  practice,  and 
the  experience  of  otlier  mines  in  the  district.  In  nearly  all 
mines  there  certainties,  probabilities  and  possibilities  for  the 
rectirrence  of  ore  beyond  that  actually  developed.  In  all  cases 
the  appraiser  attempts  to  ascertain  the  total  amount  of  ore 
\\hich  may  I'casonably  be  expected  to  be  produced  from  the 
property.  As  a  matter  of  actual  results  of  this  method  of  mine 
appraisal,  tho  lonnage  of  prospective  ore  for  vi^hich  mines  are 
actually  assessed  considerably  exceeds  the  tonnage  of  devel- 
oped ore. 

The  product  of  total  tonnage  multiplied  by  calculated  prof- 
it per  ton  will,  in  most  cases,  be  far  in  excess  of  present  value 
because  the  rate  at  which  ore  can  actually  be  mined  from  a 
given  property  is  limited  by  both  physical  and  market  condi- 
tions. As  a  matter  of  fact  the  extracting  and  marketing  of  the 
ore  in  most  mines  will  occupy  a  period  of  years  and  the  in- 
come, therefore,  will  be  realized  in  annual  installments  extend- 
ing over  the  same  period  of  years.  The  life  of  a  mine,  which  is 
the  period  that  will  be  required  for  mining  and  shipping  the 
ore,  must,  therefore,  be  taken  into  account.  This  is  calculated 
by  dividing  the  total  estimated  tonnage,  developed  and  pro- 
spective, by  the  average  annual  shipments  based  on  the  ex- 
perience of  five  years.  Having  determined  the  annual  install- 
ments of  profit  and  the  number  of  such  annual  installments, 
the  product  of  the  two  is  reduced  to  "present  worth"  by  the 
annuity  method  using  an  interest  rate  of  6%  for  both  principal 
and  sinking  fund.  In  all  the  calculations  necessary  as  to  an 
nual  receipts  from  ore  sales,  annual  expenses  of  operation,  and 
annual  shipments  to  determine  the  life  of  a  mine,  the  average 
for  the  preceding  five-year  period  is  taken.  The  reason  for  this 
being  that  in  this  way  violent  fluctuations  in  assessments  are 
avoided  and  the  effect  of  conditions  operating  for  one  year  only 
are  reduced  to  a  minimum. 

It  is  obvious  that  an  undeveloped  property  can  have  no 
operating  records  from  which  profits  may  be  calculated,  or 
the  life  it  would  have  as  an  operating  mine  determined,  and 
that  information  as  to  the  size  and  richness  of  the  ore  body 
may  not  be  complete.  For  determining  the  expectations  of  .such 
a  property  the  actual  information  obtained  is  supplemented  by 
the  experience  of  mines  under  similar  conditions  in  the  district 
in  which  the  undeveloped  property  is  located  with  proper 
allowance  for  the  time  necessary  for  developing  such  property 
to  the  productive  stage. 

The  above  methods  are  applicable  in  general,  but  may  be 
modified  by  conditions  appurtenant  to  individual  cases,  such 


SPECIAL  REVENUE  COMMISSION  211 

as  tlie  physical  condition  of  the  property,  state  of  developiuenl, 
operating  history  of  the  mine.  Such  modifications  involving 
departure  from  the  general  method  are  applied  in  accordance 
with  the  judgment  of  the  appraiser  of  mines  (the  state  geolo- 
gist) and  Board  of  State  Tax  Commissiioners  and  need  not  be 
considered  here. 

In  working  out  the  Michigan  system  of  mining  appraisals 
the  Board  of  State  Tax  Commissioners  has  had  in  mind  the 
fact  that  mines,  like  other  property,  must  be  assessed  at  their 
full  cash  value  and  that  the  statute  defines  "cash  value"  to 
be  the  usual  selling  price  of  the  property.  Iron  mines,  how 
ever,  are  rarely  bought  and  sold  and,  as  in  the  case  of  public 
utilities,  methods  of  ascertaining  value  that  are  almost  uni- 
versally followed  by  a  prospective  buyer  will  most  nearly  meet 
the  requirements  of  the  statute.  That  the  Michigan  method 
above  described  produces  figures  that  represent  with  very 
approximate  accuracy  the  true  present  worth  or  iron  mines  is 
the  belief  of  the  Board  of  State  Tax  Commissioners.  As  bear- 
ing on  this  question  it  is  only  fair  to  refer  here  to  the  fact  that 
onlj^  two  instances  of  bona  fide  sales  of  operating  iron  mines 
have  occurred  in  the  past  few  years  and  both  were  made  at 
figures  below  their  appraised  value  for  taxation.  The  follow- 
ing table  will  show  the  assessment  of  the  iron  mining  proper- 
ties as  made  by  the  supervisors  in  1911  and  as  appraised  by 
the  Tax  Commission  the  same  year  and  subsequent  years : 

By  Supervisors 1911  $26,987,477 

By  Tax  Commission    1911  92,931,469 

1912  90,142,436 

1913  95,884,215 

1914  92,090,349 

1915  89,757,605 

1916  90,737,608 

1917  91,829,286 

1918  108,203,419 

During  the  period  beginning  with  1911  and  down  to  llie 
date  when  the  1918  mining  appraisal  was  made  there  wei'o 
shipped  from  Michigan  mines  93,310,698  tons  of  ore.  Il  is 
apparent,  therefore,  that  as  a  result  of  development  and  dis- 
covery additional  tonnage  of  ore  both  in  operating  mines  ;ind 
in  new  territory  has  been  located,  appraised  and  placed  ui)on 
the  assessment  roll  sufficient  in  amount,  togellicr  with  the  in- 
creased value  given  to  ore  tonnage  already  located  and  ap- 
praised, to  more  than  offset  the  tremendous  shii)ments  of  the 
past  few  years. 


212  .         REPORT  OF  THE  NEW  MEXICO 

It  is  to  be  noted  that  the  auiiuul  re-appraisal  of  mining 
properties  extends  only  to  operating'  mines  and  real  estate 
known  to  contain  ore  bordies  not  yet  developed.  All  other 
property  is  left  to  the  local  assessor  and  board  or  review  as 
in  other  assessing  districts  of  the  state.  In  all  mining  dis- 
tricts there  are  lands  on  which  no  ore  bodies  have  been  located, 
but  on  which  there  is  greater  or  less  possibility  of  the  occur- 
rence of  ore.  The  Board  of  State  Tax  Commissioners  does 
not  attempt  to  appraise  such  lands  or  to  assist  the  local  as- 
sessor in  doing  so,  inasmuch  as  they  have  no  information  not 
possessed  by  the  local  official.  The  appraiser  of  mines  has 
al tempted  to  assist  local  assessing  officers  by  indicating  to 
them  the  descriptions  that,  because  of  locality  and  geological 
conditions,  are  most  likely,  in  his  judgment,  to  contain  ore. 
An  examination  of  the  assessemnt  roll  of  any  mining  district 
will  disclose  the  fact  that  assessing  officers  do  take  into  con- 
sideration the  probability  of  the  existence  of  undiscovered  ore 
bodies.  The  assessment  of  this  class  of  property  is  rendered 
difficult  by  the  fact  that  in  mining  districts,  not  only  operating 
mines,  but  lands  having  ore  possibilities,  are  very  rarely  bought 
and  sold  and  there  are  few  transactons  from  Avhich  to  deter- 
mine the  "usual  selling  price"  of  property.  The  leasing  sys- 
tem very  generally-  prevails,  and  prospecting  for  ore  is  done 
under  a  lease  which  provides  for  royalties,  in  case  ore  is  dis- 
covered, but  not  for  the  purchase  of  the  property.  The  results 
of  successful  operations  are  reported  to  the  appraiser  of  mines 
and  the  property  is  at  once  appraised  and  the  valuation  re- 
poi-ted  to  the  local  assessor  at  the  next  annual  re-appraisal. 
This  leasing  system  encourages  exploration  woT-k,  but  it  pro- 
vides assessors  with  little  data  based  upon  "selling  price". 
The  Board  of  State  Tax  Commissioners  and,  we  believe,  local 
assessing  officers  in  mining  districts,  will  welcome  assistance 
from  any  source  that  will  aid  in  appraising  this  class  of 
property! 


SPECIAL  REVENUE  COMMISSION  213 


APPENDIX  VII. 

SHORT  BALLOT  STRONGLY  URGED  BY  THE 

TAXPAYERS'  ASSOCIATION  OF 
_  NEW  MEXICO. 

At  the  annual  meeting  of  the  Taxpayers'  Association  of 
New  Mexico  held  in  October,  1919  there  was  a  discussion  of  the 
questions  of  government  costs,  in  state  and  county  government 
in  NeAV  Mexico  and  it  was  the  unanimous  opinion  of  the  meet- 
ing that  only  through  greater  simplification  and  more  tho- 
rough co-ordination  of  governmental  offices  and  functions  can 
the  evils  of  inefficiency  and  extravagance  be  corrected.  With 
a  view  of  attempting  to  bring  about  such  desired  co-ordination 
in  our  governmental  system  a  committee  of  the  Assoeiatior 
-was  appointed  to  study  the  question  and  to  draft  a  report  of  its 
finding  for  the  consideration  of  the  association.  On  this  com- 
mittee were  appointed  Ex-Governor  W.  E.  Lindsey,  Mr.  Neill 
B.  Field,  Mr.  James  G.  Fitch,  Judge  E.  R.  Wright  and  Mr. 
Frank  W,  Clancy.  The  full  report  of  the  committee  to  the 
Association  is  as  follows : 

Albuquerque,  New  IMexico. 
February  21.  1920. 
To  The  Taxpayers'  Association,  Santa  Fe,  New  Mexico: 
Gentlemen: 

The  undersigued^  committee  appointed  October  16th,  1919, 
at  the  annual  meeting  of  the  Association,  according  to  1h<^ 
provisions  of  the  following  resolution,  to-wit :  "Kesolved:  That 
it  is  the  sentiment  of  this  Association  that  tlic  most  efficient 
remedy  for  the  governmental  evils  in  our  state  government,  so 
well  stated  by  Governor  Tjindsey  and  Judge  Wright,  is  to  be 
found  in  the  reduction  of  the  elective  officers  to  the  smallest 
practical  number  Avith  a  view  of  uniting  power  and  responsibi- 
lity, which  will  result  in  consequent  increased  efficiency", 
respectfully  report  as  follows: 

I. 

We  recommend  1lint  the  Association  endorse  the  follow  iiig 
draft  of  a  joint  resolution  proposing  an  amendmeni  lo  the  Con- 
stitution of  the  State  of  New  Mexico  .ind  ur<j(>  ils  ;i(l()i)ti()n 
by  the  legislnturc  nt  its  next  session  : 

Joint  Resolution  No 

"Be  it  Resolved  by  the  Legislature  of  the  Sl;i1e  of  New  Moxicn : 
That  the  following  amendment  to  the  Constitution  of  the 


214  REPORT  OF  THE  NEW  MEXICO 

State  of  New  jNIexico  to  be  known  at  "The  State  Short  Ballot 
Amendment"  is  hereby  proposed  to  be  submitted  to  the  electors 
of  the  Slate  for  their  approval  or  rejection  at  an  election  to  be 
held  in  the  State  on  the  Tuesday  next  after  the  first  Monday 
of  November  1921. 

That  hereafter  no  state  executive  officer  or  commissioner 
shall  be  elected  at  the  regular  election  held  in  the  month  of 
November,  1922,  or  at  any  election  thereafter,  except  a  Gover- 
nor and  a  Lieutenant-Governor,  each  of  whom  shall  hold  his 
office  for  a  term  of  four  years  beginning  with  the  first  day  of 
January  next  after  his  election.  The  Governor  shall  nominate 
and  by  and  with  the  advice  and  consent  of  the  Senate  appoint 
all  other  state  executive  and  administrative  officers  created  by 
the  Constitution  or  laws  of  the  State  of  New  Mexico,  including 
those  hereafter  to  be  created  and  all  such  officers  shall  hold 
their  respective  offices  during  the  pleasure  of  the  Governor. 

State  executive  officers  and  commissioners  heretofore 
elected  by  the  people  shall  continue  in  office  during  the  period 
for  which  they  Avere  respectively  elected  unless  sooner  removed 
in  accordance  with  existing  law." 

II. 

In  order  that  the  subject  matter  covered  in  the  resolution 
of  our  appointment  may  be  brought  to  the  attention  of  the 
people  of  the  state,  particularly  to  the  voters  thereof,  we  recom- 
mend that  the  following  draft  of  a  platform  plank  be  approved 
by  the  Association  and  urged  for  adoption  into  the  party  plat- 
forms in  the  conventions  of  all  parties  this  year  for  the  nomi- 
nation of  candidates  for  state  officers : 

"We  favor  the  adoption  of  the  principle  of  the  short 
ballot  in  the  Executive  Department  of  the  State  Govern- 
ment; also  the  consolidation  of  state  administrative  func- 
tions into  an  appropriate  number  of  departments  with 
appointive  heads  who  shall  constitute  the  Governor's  Cabi- 
net ;  and  we  believe  that  all  department  officials  and  em- 
ployees subordinate  to  the  appointive  head  thereof,  should 
receive  appointment  and  hold  tenure  of  place  according  to 
merit,  the  same  to  be  determined  by  adequate  civil  service 
code;  and,  if  successful  at  the  polls,  we  pledge  ourselves 
to  use  our  best  efforts  for  the  accomplishment  of  all  the 
foregoing  as  speedily  as  may  be." 

III. 

We  believe  that  the  adoption  of  the  principle  of  the  short 
ballot  in  the  executive  department  of  our  state  government  will 


SPECIAL  REVENUE  COMMISSION  215 

go  far  to  relieve  our  people  from  the  burden  of  the  present 
irresponsible,  extravagant,  and  un-democratic  government 
which  is  plunging  the  state  into  more  and  more  debt,  and 
more  and  more  increasing  the  burdens  of  taxation  without  any 
corresponding  benefit  or  protection  and  more  and  more  pre- 
venting the  investment  of  capital  in  the  state,  for  the  develop- 
ment of  its  natural  resources. 

IV. 

We  believe  that  the  tendency  to  centralization  of  power 
and  authority  in  the  general  government  made  specially  mani- 
fest during  the  Nation's  participation  in  the  "World  War" 
and  the  consequent  encroachment  upon  the  constitutional  pow- 
er and  authority  of  the  states  can  be  successfully  resisted  only 
through  a  like  consolidation  and  centralization  of  power  in  the 
state  government,  whose  executive  should  be  clothed  with  suf- 
ficient authority  to  control  public  expenditure  and  the  adminis- 
trative policy  of  the  state  and  who  would  exercise  his  powers 
with  a  full  sense  of  his  responsibility  to  the  people  while  the 
people  would  thereby  be  enabled  to  place  responsibility  for 
extravagance  and  mal-administration  of  public  affairs.  Experi- 
ence has  demonstrated  that  the  increasing  costs  of  the  ad- 
ministration of  the  government  are  directly  traceable  to  diver- 
sified responsibility;  a  large  number  of  elective  officers  de- 
tract from  executive  power  and  make  it  difficult,  if  not  im- 
possible, for  the  people  to  locate  responsibility  for  results 
which  they  disapprove  and  prevent  them  from  securing  ef- 
ficiency in  government  which  is  the  principal  concern  of  the 
taxpayer. 

Some  of  the  states  have  already  adopted  this  reform, 
noticeably  the  state  of  Illinois,  with  great  success.  It  is  under 
consideration  in  many  others.  We  respectfully  recommend 
that  your  Association  urge  it  upon  the  people  of  New  Mexico. 

W.  E.  LINDSEY,  Portales, 

Chairman, 
JAR.  G.  FITCIT,  Socorro, 
F.  W.  CTiANOY,  Santa  Fe. 
NEILL  15.    VIVAjD,  Albuquerque, 
E.  R.  WmriTlT,  Santa  Fe, 

Committee. 

The  Executive  Committee  of  the  Taxpayers'  Association 
has  been  consulted  as  to  this  report  and  it  is  the  opinion  of 
that  committee  that  the  recommendations  of  the  Lindsey  Com- 
mittee be  unqualifiedly  endorsed  by  Ibo  Association  and  that 


216  KKl'OKT  OF  THE  NEW  MEXICO 

the  Association  tlo  all  tlial  i1  can  properly  do  to  secure  the 
adoption  by  the  legislature  of  the  resolution  reconnnended  and 
by  the  political  pai-tics  of  the  platform  plank  suggested.  With 
this  in  view  copies  of  the  report  will  be  sent  to  the  party 
leaders  of  the  various  political  parties  asking  that  the  action 
recommended  be  taken  at  their  respective  conventions. 

The  report  of  the  Committee  of  which  Govei-nor  Lindsey  is 
chairman  and  whose  members  are  n'len  of  the  highest  standing 
in  the  connuunity  with  long  experience  in  public  affairs  was 
drawn  up  after  mature  and  careful  deliberation  and  merits 
the  careful  consideration  of  the  people  of  the  state.  Our  con- 
stantly increasing  total  and  per  capita  cost  of  government 
makes*  it  positively  necessary  that  the  people  through  their 
elected  representatives,  devise  methods  for  more  business-like 
and  less  costly  administration  of  their  affairs.  It  will  be  next 
to  impossible  to  attain  this  end  until  we  have  a  responsible 
government  and  if  the  plan  proposed  meets  Avith  the  backing 
and  sincere  endorsement  of  the  voters  of  New  Mexico,  irre- 
spective of  party,  we  believe  it  can  be  made  to  solve  many  of 
the  difficulties  we  now  labor  under. 

We  heartily  connnend  the  report  to  the  public  and  bespeak 
for  it  the  active  help  of  every  well-wisher  of  the  state. 

THE  EXECUTIVE  COMMITTEE   OF  THE 

TAXPAYERS'  ASS'N  OF  NEW  MEVICO, 

By  H.  J  Hagerman,  Chairman. 


SPECIAL  REVENUE  COMMISSION  217 

APPENDIX  VIII. 

CONTROL  OF  BOND  ISSUES.  ; 

(Extract  from  Indiana  Law.) 

Sand  Lssues — How  Authorized — Referendum. 

201.  Hereafter  no  municipal  corporation  shall  issue  any- 
bond  or  other  evidence  of  indebtedness  without  the  approval 
of  the  state  board  of  tax  commissioners.  Any  such  corporation, 
desiring  to  issue  any  such  bond  or  other  evidence  of  indebted- 
ness, shall  file  its  petition  therefor  in  the  office  of  the  state 
board  of  tax  commissioners,  setting  forth  the  facts  showing 
the  necessity  for  such  issues.  The  petitioner  shall  give  notice 
of  the  filing  of  such  petition  and  hearing  thereon,  to  the  tax- 
payers of  the  taxing  district  to  be  affected  by  such  issue,  by 
publication  for  two  weeks  prior  to  such  hearing  in  two  lead- 
ing newspapers  of  opposite  political  parties,  published  in  such 
district,  or  in  one  such  paper  if  only  one  be  there  published. 
or  in  case  no  newspaper  is  there  published,  then  by  posting 
such  notice  in  three  public  places  in  such  taxing  disti-iet.  On  Ihe 
hearing  of  such  petition,  if  it  appear  that  a  necessity  exists 
for  the  relief  prayed  for,  the  state  board  of  tax  commissioners 
shall  approve  the  issuance  of  such  bonds  or  other  evidence  of 
indebtedness  either  as  prayed  for,  or  with  such  modifications 
or  upon  such  conditions  as  may  be  deemed  just  and  proper.  If, 
on  such  hearing,  it  shall  appear  that  such  relief  ought  not  to 
be  granted,  the  state  board 'of  tax  commissioners  shall  so  de- 
clare, and  such  bonds  or  other  evidences  of  indebtedness  shall 
not  be  issued.  All  bonds  or  other  evidences  of  indebtedness 
issued  under  any  order  of  such  board  shall  be  incontestable, 
except  for  fraud,  forgery  or  for  excess  of  the  constitutional 
limitation;  Provided,  however.  That  in  case  any  petition  for 
the  issue  of  such  bonds  in  an  amount  not  less  than  fifty  thous- 
and dollars  has  been  denied  by  the  state  board  of  tax  commis- 
sioners, the  tax  levying  officer  or  officers  in  the  unit  affected 
by  such  denial  may,  within  ten  days  from  the  date  of  such  de- 
nial, file  in  the  office  of  said  state  board  of  tax  commissioners 
a  petition  for  the  submission  of  the  question  whether  such 
bonds  shall  be  issued  to  the  legal  voters  of  the  taxing  unit  to 
be  affected  thereby.  If  such  boards  be  satisfied  that  said  last 
named  petition  is  in  due  form,  it  shall  grant  the  prayer  thereof 
within  ten  days  from  the  filing  of  sueh  petition  and  order  such 
election  at  a  time  to  be  fixed  in  such  order.  The  county  audi- 
tor shall  give  the  notice  for  such  election,  and  all  proceedings 
on  the  holding  of  such  election  shall  be  governed  by  the  law 
regulating  general  elections  in  such  municipality.    Tlic  county 


218  REPORT  OF  THE  NEW  MEXICO 

auditor  shall  certify  the  result  of  such  election  to  the  state 
board  of  tax  commissioners,  and  if  such  result  be  in  favor  of 
the  issuance  of  such  bonds  said  state  board  of  tax  commis- 
sioners within  ten  days  after  the  filing  of  such  certificate  of 
result  shall  enter  an  order  approving  such  issue.  All  costs 
and  expenses  for  the  holding  of  such  election  shall  be  paid  by 
the  taxing  unit  interested  in  the  issuance  of  such  bonds. 


I 

I 


SPECIAL  REVENUE  COMMISSION  219 


APPENDIX  IX. 

SUMMARY   OF   THE   FINAL   REPORT   OF   CHARLES   R. 

BRICE,  STATE  DISBURSING  AGENT  OF 

NEW  MEXICO  STATE  COUNCIL 

OF  DEFENSE. 

The  State  Council  of  Defense  was  organized  May  10,  1917, 
under  the  Public  Defense  Act  passed  by  the  State  Legislature, 
May  8th  of  that  year.  This  act  authorized  the  issuing  of  cer- 
tificates of  indebtedness  to  the  extent  of  $750,000  or  so  much 
thereof  as  might  be  necessary  to  meet  the  unusual  demands 
upon  the  state  by  reason  of  the  World  War.  The  accounting 
was  carried  on  under  the  following  general  heads: 

Appropriation. 
Certificates  of  Indebtedness. 
Expenses  of  Administration. 
Legislative  Appropriation. 
Agricultural  Operations  Co-Operative. 
Seed  and  Agricultural  Supplies. 
Military  Account,  and 
State  Treasurer  War — Fund. 


220 


REPORT  OF  THE  NEW  MEXICO 


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222  REPORT  OF  THE  NEW  MEXICO 

All  disbursements  were  made  by  vouchers,  issued  by  the 
State  Council  of  Defense,  to  which  itemized  and  verified  ac- 
counts, audited  by  the  General  Secertaary,  and  approved  by 
the  Disbursing  Agent  or  the  Chairman  of  Council's  Executive 
Committee,  were  presented  to  the  State  Auditor  who  drew 
State  Warrants  on  the  State  Treasurer,  payable  to  each  cred- 
itor. 

The  expenses  of  Administration  account  represent  a  net 
expense  of  administration  and  is  subdivided  under  the  follow 

ing  sub-heads: 

Members  of  the  Council 

Per  diem  and  expenses  - - __ $  2,656.80 

Office  of  General  Secretary 

Salaries $16,549.53 

Travel,  postage,  stationery,  supplies,  etc 9,722.08      26,271.61 

Woman's  Committee 

Salaries,    travel,    postage,    supplies,    tele- 
phone, etc., 820.78 

Child's  Welfare  ActiviUes 1,273.44        2,094.20 

Publicity  Department  and  War  News 

Salaries   and   personal   services   ...._ 3,170.00 

Printing  and  stationery  _ 1,599.48 

Miscellaneous  expenses  - - 800.90        5,570.38 

Speakers  Bureau  . 

Salaries  and  personal  services  200.00 

Travele  and  personal  expenses  790.25 

Postage,  telegraph,  supplies,  etc 74.81         1,065.06 


Health  and  Medical  Department 

Salaries,  including  travel  and  personal  exp.  7^4.16 

Medicine,  postage,  stationery,  etc 905.69         1.689.85 


Educational  Department 

Food   problem   books   distributed   to  public 

schools 2,148.36 

Printing  and  stationery 16.25        2,164.62 


Red  Cross 

Knitting  machines,  etc _ _.  395.67 

Liberty  Loan 

Telegrams,  First  Drive  „ 59.65 

State  Federal  Food  Administration 

Salaries,  clerk  hire,  postage,  supplies,  etc 644.63 


SPECIAL  REVENUE  COMMISSION  223 

Historical  Service  Board 

Salaries  and  personal  expenses 4,432.81 

Equipment,  stationery,  supplies,  etc 3,045.65        7,478.46 

Total   Administrative    - $50,090.93 

Legislative  Appropriations 

Withdrawn  by  Governor  Lindsey $  3,500.00 

Withdrawn  by  Governor  Larrazolo  5,000.00 

Medals   for  Generals   Pershing,   Wood   and 

Barnett  and  Admiral  Benson 1,000.00 

Presentation  expenses  - - /. 300.00        9,800.00 


Agricultural  Operations — Co-operative 

Agricultural  College — salaries  13,534.37 

Travel  and  personal  expenses  7,516.99 

Supplies,  printing,  stationery,  etc 2,479.35      23,548.71 


New  Mexico  Penitentiary 

Seed,  implements,  machinery,  supplies  and 

miscellaneous  expenses 19,639.90 

U.  S.  Biological  Survey 

Rodent  evtermination 59,652.74 

Less  sales  of  poison  and  materials 20,099.05      39,550.69 


Predatory  animal  extermination  44,017.55 

Less  sales  of  furs  9,340.78       34,676.77 

Total  -...., - - 117.419.07 

Seed  and  Agricultural  Supplies 

Total   expended  for  seed  and  supplies 131,208.40 

Notes  and  mortgages  were  taken  on  account 
of  credit  sales — Loans  to  Farmers. 

Less  repayment  from  credit  sales 

Loans  to  farmers,  including  interest 46,764.96 

From    cash   sales   - - 33,691.93       80,456.89 


To  Balance - 50,751.51 

To  offset  this  amount  the  outstanding  loans 

to  farmers  - 45.622.35 

Accounts  receivable 7,612.30       53. 234. 60 

Total  _ 53.234.65 


224  REPORT  OF  THE  NEW  MEXICO 

The  report  states:  "All  seed  and  agricultural  supplies 
were  purchased  directly  by  the  Council  of  Defense  or  its 
Financial  Agents. 

"Where  seed  and  argri cultural  supplies  were  sold  on  cred- 
it llu'  County  Financial  Agents,  who  iuul  cluirge  of  seed  disti-i- 
bution  took  notes  and  mortgages  covering  the  cost  of  the 
seed  and  supplies  furnished  to  the  farmers. 

"No  money  was  advanced  or  loaned  to  any  person  in  any 
instance  for  any  purpose  whatsoever. 

"The  following  schedule  gives  the  total  of  such  credit 
sales  in  each  county;  indicating  the  face  value  of  all  notes, 
the  amount  of  principal  and  interest  paid,  the  balance  due  and 
the  percentage  of  pa3anents," 

Schedule  of  Loans  to  Farmers 

Credit  Sales. 

Credit  Sale       Amt.  Prin.         Interest  Balance 

county  Notes  Prln.  Paid  Paid  Due  % 

Bernalillo $  5,928.68  $  3,992.47  $    222.87  $  1,951.06  67 

Colfax 1,139.09  905.74  61.28  233.35  80 

Curry  _ 6,267.64  3,234.48  280.37  3,033.16  52 

De  Baca 110.00  110.00  4.14  100 

Dona  Ana  6,621.80  3,822.63  142.15  2,799.17  58 

Eddy  2,629.98  459.00  34.06  2,170.98  17 

Guadalupe 722.71  569.41  23.94  153.30  65 

Lincoln  „ 1,735.97  786.36  24.87  949.61  45 

Luna 4,039.05  2,474.03  94.93  1,565.02  61 

McKinley  3,467.42  2,188.77  107.40  1,278.65  63 

Mora _ 7,471.77  3,395.93  188.69  4,075.84  44 

Otero - 1.510.77  1,336.09  36.79  174.68  88 

Quay 11,664.95  2,987.51  450.80  8,677.44  26 

Rio  Arriba  101.32  101.32  2.11  100 

Roosevelt  1,662.16  722.59  25.40  939.57  43 

Sandoval  „ 2,438.31  1,773.22  49.63  665.09  73 

San  Miguel 7,375.89  3,527.77  127.24  3,848.12  48 

Santa  Fe  11,138.09  4,037.33  195.85  7,100.76  36 

Sierra 88.00  88.00  2.45  100 

Socorro 246.43  91.63  3.27  154.80  37 

Taos  _ 783.30  668.84  26.80  114.46  85 

Torrance  3,186.08  1,999.09  76.96  1,186.99  63 

Union 8,603.72  4,539.29  183.67  4,064.43  53 

Valencia 1,024.92  524.20  63.60  500.72  51 

Totals  $89,958.05  $44,335.70  $2,429.26  $45,622.35 


SPECIAL  REVENUE  COMMISSION  225 

Military  Operations  $132,093.68 

National  Guard  —  Adjutant  Gen- 
eral's office,  including  canton- 
ment at  Albuquerque $32,497.54 

Mounted  Police  16,268.75 

Military  Hospital — Albuquerque  3,244.11 

Returned  Soldier  Entertainment 5,000.00 

Agricultural  College 50.130.78 

Military  Institute 12,952.70 

University  of  New  Mexico  12,000.00       132,093.68 


Recapitulation. 

Cash  from  sale  of  War  Certificates $370,000.00 

Net  expenses  of  Administration $  50,090.93 

Net  Legislative  Appropriations 9,800.00 

Net  Agri.  Operations — Co-operative...  .  117,419.07 

Balance  Seed  and  Agri.  Supplies 50,751.51 

Net  Military  Operations  132,093.68 

Total  net  expenditures 360,155.19 

Balance  cash  on  hand — State  Treasurer $     9,844^81 

The  report  states:  "The  books  of  the  Council  Avere  audited 
and  the  figures  in  this  report  Avere  verified  by  the  State  Trav- 
eling Auditor." 

The  principal  expenditures  of  moneys  during  the  existence 
of  the  Council  are  as  follows : 

Total  expended  in  salaries  from  every  department 

of  operations  $125,825.79 

Total  traveling  and  personal  expenses , 30,800.08 

Postage,  telegraph  and  telephone 2,775.95 

Printing,  stationery  and  supplies  13,020.56 

Seed,  agricultural  supplies  and  equipment 131,262.28 

Agricultural  extension  (not  salaries  &  traveling)  17,922.33 
Rodent    and    Predatory    Animal    Externiiiiation 

(less  salaries  and  travel)  ,.  25,292.36 

Military  Operations  ., 57.892.60 

Mobilization  Camp,  Barracks,  etc 51,(i20.73 

Withdrawals  by  (Jovernors  Lindsey  and  Larrazolo  8,500.00 

Returned  Soldiers  Entertainment 5,000.00 

Medals  and  cost  of  presentation 1,300.00 

State  Rodent  Extermination  Fund 5,0()().()0 

State  Predatory  Animal  Fund 3,000.00 


226  REPORT  OF  THE  NEW  MEXICO 

Child  Welfare  Activities 1,273.44 

Medicine  541.49 

Food  Problem  Books  distributed 2,148.36 

Miscellaneous  5,871.89 

The  Uiiiveristy  of  New  Mexico  bought  the  cantonment 
building  at  Albuquerque  on  a  bid  of  $3,500,  giving  a  note  in 
payment.  This  note  was  afterwards  returned  to  the  University 
in  lieu  of  that  much  cash  in  the  allowance  of  $12,000  to  the 
institution  to  offset  the  expenses  of  the  Student  Army  Train- 
in  Corps. 

Farm  tractors,  tools,  road  implements  and  machinery  in- 
voiced at  $5,685.20  were  turned  over  to  the  State  Penitentiary. 


SPECIAL  REVENUE  COMMISSION  227 

APPENDIX  X. 

REPORT  AGRICULTURAL  COLLEGE. 

Santa  Fe,  N.  M., 
October  1,  1920. 

Hon.  H.  J.  Hagerman,  President 

Taxpayers'  Association  of  New  Mexico, 

Roswell,  New  Mexico. 

Sir: 

Herein  is  a  brief  summary  of  the  audit  of  the  State  Col- 
lege, made  jointly  by  the  State  Traveling  Auditor  and  myself. 
The  work  was  begun  July  7th,  1920  and  continued  for  five 
weeks. 

The  State  College  differs  from  all  other  institutions  of 
the  state  for  the  reason  that  it  is  tied  up  with  the  Federal 
government  in  many  of  its  activities,  and  is,  to  a  large  extent, 
supported  by  the  Federal  government.  Another  point  of  dif- 
ference is  that  its  activities  and  objects  are  three-fold,  com- 
posed of  three  divisions,  each  having  a  separate  and  distinct 
purpose  and  working  along  independent  lines.  These  divisions 
are  classed  as  follows:  The  College  proper;  Experimental 
work  in  research  in  agriculture,  horticulture,  live  stock  and 
lines  of  work  allied  with  these ;  and  the  Extension  Work  which 
has  to  do  with  extension  in  Agriculture  and  Home  Economics 
in  the  state  and  away  from  the  college. 

Each  of  these  departments  deals  with  numerous  funds, 
derived  from  various  sources.  Many  of  the  teachers  and  many 
bills  of  expense  against  the  institutions  are  paid  from  several 
funds  and  for  more  than  one  department.  The  accounting  work 
is  more  or  less  complicated  and  greatly  increased  on  this  ac- 
count, as  bills  being  paid  out  of  many  funds  are  generally  paid 
in  their  proportionate  relation  to  each  other. 

An.  analysis  of  these  various  funds  will  aid  in  giving  a 
clearer  idea  of  the  complex  nature  of  the  institution  and  of  the 
work  involved  in  the  accounting  department. 

The  MORRILL  fund  is  a  federal  fund  carrying  an  annual 
appropriation  of  $50,000  and  can  be  used  for  si^'cifif  ))urp()ses 
only.  No  part  of  this  fund  can  be  used  for  teaching  language, 
history  or  administration  expense,  buildings  or  clerk  hii-e. 

The  ILATCTT  fund  is  a  federal  fund  with  an  annual  n])- 
propriation  of  $15,000  and  is  designated  for  "Research  in  Agri- 
culture. ' ' 

The  ADAMS  fund  is  also  a  federal  fund  with  an  annual 
appropriation  of  $15,000  and  can  be  used  only  for  restricted 
lines  of  research  in  Agriculture. 


228  REPORT  OF  THE  NEW  MEXICO 

The  Hatch  and  Adams  funds  must  be  used  entirely  for 
work  at  the  college,  but  for  the  farmers  of  the  state. 

The  State  Station  fund  is  a  State  appropriation  of  $7,500 
per  annum  to  be  used  for  agricultural  research  Avork  either  at 
the  college  or  in  the  state  at  large. 

The  HATCH  SUPPLEMENTARY  fund  is  an  indefinite 
sum  derived  from  the  sale  of  live  stock  and  materials  resulting 
from  money  expended  for  experimental  purposes.  By  a  gov- 
ernment ruling  the  proceeds  of  this  fund  must  be  put  back  into 
experimental  work. 

This  fund  may  accumulate  from  year  to  year  and  now  ag- 
gregates about  $11,000,  but  seldom  exceeds  $6,000  accumulation 
in  any  one  year. 

The  STATE  fund  is  a  general  maintenance  fund  with  a 
direct  annual  appropriation  of  $33,000  for  each  of  the  sixth  and 
seventh  fiscal  years  and  37,500  for  the  eighth  and  ninth  fiscal 
years.  This  fund  is  used  for  teaching  and  college  maintenance, 
admiaistration,  insurance,  coal,  power,  light,  janitor  service, 
advertising,  water,  irrigation,  repair  to  buildings,  general  up- 
keep of  grounds,  teaching  language  and  history,  athletics, 
libraiy,  etc.  In  fact  it  seems  that  this  is  a  general  utility 
fund  used  for  almost  every  purpose  pertaining  to  the  college 
work. 

The  large  scope  covered  by  this  fund  would  seem  to  in- 
dicate that  the  appropriation  is  exceedingly  small.  Perhaps  it 
suggests  the  need  of  more  specifically  defining  and  confining 
its  use.  However,  the  fund  is  augmented  by  the  transfer  of  fees 
from  other  sources;  the  Income  fund,  Interest  on  Deposits, 
Student  Fees  and  possibly  other  funds. 

The  STATE  EXTENSION  fund  is  a  state  appropriation  to 
aid  in  the  county  extension  work.  It  equals  the  county  ex- 
tension fund,  dollar  for  dollar  up  to  $2,000  for  each  county. 
It  cannot  exceed  $43,200  and  can  be  that  large  only  in  case 
the  counties  approximate  that  much.  For  the  calendar  year 
1920  it  is  $35,430. 

The  FEDERAL-SMITH-LEVER  fund  is  provided  by  the 
Federal  government  in  accordance  with  the  Smith-Lever  Act. 
It  is  to  be  used  in  extension  work  in  agriculture  and  home  eco- 
nomics. It  goes  to  support  extension  activities  in  the  various 
counties  and  also  to  maintain  the  overhead  organization  m 
the  State  College.  For  the  current  fiscal  year,  July  1,  1920,  to 
June  30,  1921,  is  $27,634.90. 

The  STATE  SMITH-LEVER  fund  is  a  state  appropriation, 
offsetting  the  Federal  appropriation,  less  $10,000. 

The  FEDERAL  SMITH-LEVER  SUPPLEMENTARY 
fund  as  the  name  implies,  is  a  fund  appropriated  by  Congress 


SPECIAL  REVENUE  COMMISSION  229 

to  supplement  the  work  contemplated  in  the  Smith-Lever  Act. 
The  provision  is  made  that  this  must  be  used  entirely  for  the 
support  of  county  agents.  This  amounts  to  $8,533.02  during 
the  current  fiscal  year. 

The  STATE  SMITH-LEVER  SUPPLEMENTARY  fund  is 
the  state  offset  to  the  fund  above,  inasmuch  as  the  Federal 
Smith-Lever  Supplementary  fund  requires  a  state  offset.  No 
direct  appropriation  has  ever  been  made  by  the  State  Legis- 
lature to  offset  this  Federal  Smith-Lever  Supplementary  fund ; 
however,  we  show  county  appropriations  for  county  agent 
work  as  the  offset,  which  complies  with  the  Federal  require- 
ment. The  amount  is  the  same  as  the  Federal  Smith-Lever 
Supplementary. 

The  EXTENSION  SUPPLEMENTARY  fund  is  similar  to 
the  Hatch  Supplementary  fund  above,  except  that  it  applies 
entirely  to  extension  activities  and  may  be  carried  over  from 
year  to  year.     At  present  it  approximates  about  $1,000. 

The  WAR  EMERGENCY  fund  was  created  by  the  State 
Council  of  Defense  after  the  United  States  became  involved  in 
the  World  War  and  an  appropriation  of  $23,548.71  was  made 
to  the  college  and  usesd  very  largely  to  pay  the  salaries  and 
traveling  expenses  of  a  number  of  persons  designated  to  go 
over  the  state  and  incite  the  people  at  large  to  greater  efforts 
in  increased  acreage  and  larger  yields  of  agricultural  products 
to  meet  the  extra  demands  caused  by  the  war. 

In  addition  to  the  above  amount  the  State  Council  of  De- 
fense appropriated  further  sums,  aggregating  $56,737.96,  Avhich 
were  covered  directly  into  the  state  general  fund  and  it  was 
impossible  to  trace  the  specific  purposes  for  which  it  was 
used,  it  is  quite  likely  that  a  large  portion  of  it  was  spent  in 
the  erection  of  barracks,  automobile  shops  and  the  training  of 
soldiers. 

The  INCOME  fund  is  derived  from  the  income  on  invest- 
ments from  the  permanent  funds  of  the  institution.  It  has 
been  the  custom  to  transfer  the  entire  amount  of  this  fund  into 
the  state  general  fund. 

The  moneys  coming  from  students  in  matriculation  fees, 
board,  room,  etc.,  is  apportioned  into  the  appropriate  funds 
to  which  they  properly  and  naturally  belong. 

It  is  easily  seen  that  the  income  of  the  college  is  derived 
from  many  sources,  for  many  specific  purposes,  each  to  be  ac- 
counted for  in  the  proper  branch  of  the  institution,  and  for 
the  specific  purpose  for  which  it  was  appropi-iatod  or  derived. 

The  classification  of  the  expenses,  as  shown  in  this  report, 
is  perhaps,  as  fair  as  could  well  be  made  in  an  institution  with 
its  activities  so  widely  diversified  and  covering  such  a  compre- 
hensive field.     There  is  almost  no  limit  to  the  classification 


230  REPORT  OF  THE  NEW  MEXICO 

that  could  be  made,  and  no  two  persons  would  probably  agree 
on  the  same  classfication. 

There  are  two  classes  of  expense  in  the  report  which  should 
have  been  given  more  in  detail.  "Labor"  and  "Upkeep". 
In  the  labor  expenses  it  was  impossible  to  divide  as  the  examin- 
ers wanted  to  divide  it  for  the  reason  that  the  vouchers,  while 
showing  the  name  of  the  persons  to  whom  payment  was  due, 
and  giving  the  exact  number  of  hours  of  labor  performed 
failed  to  state  the  place  where  it  was  performed  or  the  specific 
thing  done.  This  labor  item  involves  a  large  expense  and  it  is 
regretted  that  it  could  not  have  been  divided  as  to  the  amount 
on  buildings,  grounds,  etc.,  the  upkeep  expense  could  have  been 
divided  more  closely  had  it  been  know^n  from  the  beginning  of 
the  audit  that  the  amount  was  so  large.  The  average  expendi- 
ture in  each  of  these  funds  was  about  $18,000  per  year  and 
seems  excessive.  This  is  especially  true  in  the  •  labor  item, 
when  in  addition  to  this  separate  item  of  labor  there  are  ad- 
ditional labor  expenses  of  large  sums.  The  labor  charged  di- 
rect to  dormitory  amounts  to  more  than  $17,000,  an  average  of 
about  $475.00  per  month  for  each  school  month  covered  by 
this  audit.  This  would  indicate  a  very  heavy  expsense  for 
waiting  tables  and  helping  in  the  kitchen  work.  To  upkeep 
has  been  charged  more  than  $31,000  for  labor,  an  exceedingly 
heavy  item  averaging  more  than  $600  per  month.  Labor  has 
also  been  charged  direct  to  Library,  Sales  Room,  Military  and 
Athletics,  so  that  when  all  labor  items  shown  in  the  report 
are  thrown  together  it  amounts  to  more  than  $120,000  or  an 
average  of  more  than  $2,500  per  month.  This  is  a  small  school. 
The  largest  attendance  in  its  history  was  during  the  year 
1919-1920  w^hen  its  enrollment  reached  five  hundred  students. 
It  is  true  that  much  of  this  labor  was  used  in  the  erection  of 
barracks,  and  perhaps  on  other  college  buildings. 

There  may  be  another  side  to  this  labor  expense  item. 
Almost  the  entire  amount  paid  for  labor  was  paid  direct  to  the 
students,  many  of  whom  w'ould  not  probably  have  been  able 
to  attend  the  college  were  it  not  for  the  fact  that  they  had 
an  opportunity  to  help  make  their  way  by  earning  something 
to  meet  their  expenses  while  in  the  school. 

Unoffidal  Audits. 

It  appears  that  since  the  date  of  the  audit  made  by  the 
traveling  auditor  in  1916,  there  have  been  tw^o  unofficial  audits. 
These  have  been  of  little  practical  value  to  the  college  as  they 
seemed  to  be  nothing  more  than  a  checking  up  of  the  cash 
account  and  a  failure  to  analyze  the  expenses  of  the  institu- 
tion. More  than  $1400  was  paid  for  these  audits  with  other 
unpaid  claims  for  this  purpose.    Under  the  state  law  it  is  made 


SPECIAL  REVENUE  COMMISSION  231 

the  duty  of  the  State  Traveling  Auditor  to  make  these  audits 
without  charge  to  the  college.  It  would  appear  that  there  is 
little  justification  for  having  it  done  by  private  persons  at 
heavy  expense.  It  is  most  important  that  such  an  institution 
should  be  audited  at  least  once  a  year  and  a  very  close  check 
made  of  the  disposition  of  the  state  funds  as  is  done  by  the 
Federal  government  with  reference  to  the  moneys  contributed 
by  it  to  the  use  of  the  school. 

New  Buildings  and  Improvements. 

The  matter  of  improving  the  college  grounds,  the  erection 
of  buildings,  the  construction  of  sewer  and  irrigation  systems, 
and  the  building  up  of  better  breeds  of  live  stock  was  pre- 
sented to  the  board  of  regents  very  early  in  the  administration 
of  Dr.  Crile.  Reference  to  the  minutes  of  the  board  disclose 
the  fact  that  these  improvements  were  discussed  quite  fully 
by  the  board  on  several  occasions.  The  first  of  these  improve- 
ments was  arranged  for  on  September  17,  1917,  when  the  con- 
tract for  the  sewer  system  was  awarded  to  the  Las  Cruces 
Lumber  Company  at  a  cost  of  $9,810.38. 

The  minutes  of  the  board  under  date  of  December  21,  1917, 
read  in  part  as  follows: 

"Minutes  of  the  Board  of  Regents,  December  21.  1917. 

"President  Hill  was  in  the  chair,  Regents  Crampton, 
Monical,  Quesenberry  and  President  Crile  also  being  pres- 
ent. President  Crile  explained  the  situation  regarding 
funds,  stating  that  between  now  and  June  30,  1918,  to 
say  nothing  of  additional  rental  funds,  there  will  be  $82,- 
944  to  work  with,  he  stated  it  would  be  safe  to  count  on 
$90,000,  including  rental  and  Hatch  Supplementary  funds. 
The  certificate  of  deposit  funds  amounting  to  $1,000  were 
returned  some  time  ago  to  the  State  of  New  Mexico,  ac- 
cording to  the  requirements  of  law." 

"President  Crile  stated  that  the  total  moneys  re- 
ceived from  the  Bonding  Company  covering  the  loss  in  the 
Las  Cruces  Bank  failure,  amounting  to  seventy-nine  thous- 
and six  hundred  and  some  odd  dollars;  of  which  amount 
$21,000  should  become  a  part  of  the  permanent  fund  leav- 
ing about  $59,000  available  for  the  purposes  of  the  school." 

"On  motion,  duty  seconded,  the  following  recommen- 
dations made  by  President  Crile  were  adopted: 

1.  The  building  of  the  barns  and  corrals 

for  the  live  stock,  approximate  cost $12,000 

2.  The  putting  in  of  a  pumping  plant  and 
distributing  system  for  water  on  the 
grounds,  total  cost - 15,000 


232  REPORT  OF  THE  NEW  MEXICO 

« 

3.  Repairing  of  the  engineering  building, 
and  building  of  a  brick  one-story  addi- 
tion for  shop  work  2,500 

4.  Putting  steam  heat  into  the  boys'  dor- 
mitory       2,000 

5.  Building  of  a  hospital  3,000 

6.  Building  of  a  President's  house 8,000 

7.  That  the  President's  house  be  designed 
the  proper  specifications  submitted,  and 
the  contract  let  to  the  lowest  responsible 
bidder;  that  all  other  work  be  done  by 
force  account  or  contract  under  the  di- 
rection of  the  executive  committee." 

When  we  look  at  the  figures  actually  expended  we  find 
that  the  barns  cost  more  than  $25,000 ;  repairs  and  additions 
to  the  engineering  buildings  more  than  $14,000;  President's  res- 
idence more  than  $14,000 ;  the  hospital  more  than  $5,000  and 
the  amount  expended  for  live  stock  amounted  to  somethiHg 
more  than  $23,000. 

Considering  the  fact  that  none  of  the  Federal  funds  were 
available  for  either  new  buildings  or  improvements  on  the 
grounds,  with  an  appropriation  of  but  $12,500  for  buildings 
and  an  allowance  of  $37,500  for  maintenance,  to  be  increased 
with  the  income  fund  and  the  small  amount  of  interest  on 
bank  deposits,  it  is  unnecessary  to  say  that  an  additional  bur- 
den of  such  a  comprehensive  constructive  program  must  neces- 
sarily rob  the  institution  of  its  maintenance  fund  or  plunge 
it  into  hopeless  debt.  It  now  appears  that  both  have  been  ac- 
complished. This  is  proven  by  the  fact  that  the  state  general 
fund  is  overdrawn  for  more  than  $96,000.00. 

The  need  of  some  of  these  buildings  and  improvements  may 
well  be  admitted.  Every  person  familiar  with  conditions  at 
the  college  prior  to  the  improvements  made  during  the  past 
two  years  will  agree  that  there  has  been  a  marvelous  change 
in  the  general  appearance  of  the  plant  and  a  decided  improve- 
ment in  its  working  conditions.  It  may  also  be  said  in  all  fair- 
ness that  in  making  these  improvements  at  a  time  when  the 
cost  of  labor  and  materials  are  abnormally  high,  value  has  been 
received  for  the  money  expended.  The  cause  of  this  large 
deficit  is  due  directly  to  the  large  amounts  expended  for  build- 
ings, improvements  and  live  stock.  The  one  question  imme- 
diately suggesting  itself  is — has  the  board  of  regents  and  the 
president  of  the  college  the  legal,  or  even  moral  right,  to  divert 
the  regular  maintenance  fund  to  other  purposes.  They  are  the 
trusted  agents  of  the  state.  If  the  state,  through  its  legisla- 
ture, fails  to  make  provision  for  the  erection  of  buildings  and 


SPECIAL  REVENUE  COMMISSION  233 

the  improvements  of  the  real  estate,  badly  needed  as  they  may 
be,  has  the  board  the  right  to  divert  the  maintenance  fund 
into  other  channels  than  those  for  which  they  were  specifically 
intended?  The  legislature  of  1913  appropriated  the  sum  of 
$33,000  for  maintenance  for  each  of  the  sixth  and  seventh  fiscal 
years.  The  1919  legislature  increased  this  amount  to  $37,500 
for  the  eighth  and  ninth  fiscal  years.  Other  appropriations 
were  made  for  other  specific  purposes.  In  addition  to  the 
appropriation  of  $37,500  for  maintenance  the  1919  legislature 
appropriated  the  sum  of  $12,500  for  buildings  for  the  eighth 
fiscal  year  only. 

The   New  Mexico   Statutes,   Codification  of   1915,   Chapter 
CI,  Paragraphs  5158,  5160,  5161  and  5167  read  as  follows: 

5158.    Expenditures — Indebtedness  in  Excess  of  Appropri- 
ation. 

Section  141.  Every  officer,  board,  body  or  agency,  or 
any  member  thereof,  empowered  to  expend  any  public 
money  or  to  direct  in  the  expenditure  thereof,  or  to  con- 
tract indebtedness  against  or  in  view  of  specific  appropri- 
ations, is  hereby  prohibited  from  making  any  contract  in- 
curring any  expense,  or  contracting  any  liability  against 
this  state  or  any  public  fund  thereof,  which  shall  make 
tend  to  make,  or  contemplate  any  excess  of  expenditure 
beyond  the  terms  of  the  laws  authorizing  expenditures 
by  them,  or  either  of  them,  or  under  their  direction ;  and 
it  shall  be  unlaw^ful  for  any  trustee,  superintendent,  ward- 
en, or  other  officer  of  any  of  the  educational,  penal,  chari- 
table or  other  institutions  of  this  state,  who,  under  the 
laws,  has  authority,  or  may  be  vested  with  authority  to 
purchase  supplies,  employ  servants  or  assistants,  contract 
indebtedness,  or  to  do  any  act  contemplating  the  expendi- 
tures of  public  moneys,  to  contract  any  indebtedness  in 
behalf  of  such  institutions  or  ostensibly  against  the  state^ 
on  account  of  such  institutions  in  excess  of  the  api)ropria- 
tion  made  for  the  maintenance  and  support  thereof;  but 
in  respect  to  the  Penitentiary,  the  Asylum  of  the  Insane, 
the  Reform  School,  the  Institute  for  the  Blind,  the  Minors' 
Hospital  and  the  Deaf  and  Duinl)  Asylum,  if  the  specific 
appropriations  thereof  shall  have  become  exhausted,  food 
and  clothing  for  the  inmates  thereof  may  be  purchased 
on  the  credit  of  the  state. 

5160.     Exceeding-  Appropriation.s — Penalty. 

Section  143.  Any  person  violating  any  of  the  provis- 
ions of  the  two  preceding  sections  shall  bo  deemed  guilty 


234  REPORT  OF  THE  NEW  MEXICO 

of  a  felony,  and,  upon  conviction  thereof,  shall  be  pun- 
ished by  a  fine  not  exceeding  $500,  nor  less  than  $100,  or 
by  imprisonment  in  the  penitentiary  for  not  less  than  six 
months  nor  more  than  one  year,  or  by  both  such  fine  and 
imprisonment  in  the  discretion  of  the  court  trying  such 
cause. 

5161.    Grand  Jury— Dnty. 

Section  144.  It  is  hereby  made  the  duty  of  the  several 
district  judges  to  call  the  attention  of  grand  jurors  to  the 
provisions  of  the  three  preceding  sections. 

5167.    Disbursement  of  Funds. 

Section  150.  The  secretary  and  treasurer  of  all  such 
boards  shall  make  disbursements  of  the  funds  in  his  hands 
on  the  order  of  the  board,  which  order  shall  be  counter- 
signed by  the  president  of  the  board  and  shall  state  on 
what  account  the  disbursement  is  made. 

The  following  is  a  detailed  statement  of  expenditures  for 
new  buildings,  repairs  on  buildings  and  improvements  on  real 
estate. 

New  Buildings. 

Poultry  houses,  yards,  etc $  3,078.90 

Four  Barns 25,210.43 

President's  Residence 

Building _ $13,574.29 

Draperies  &  curtains         567.43—  14,150.72 
Machinery  Building  and  Shop 

Building $14,180.14 

Machicnery  3,228.16—  17,408.30 

Addition  to  boys  dormitory 

heating  included  15,881.84 

Barracks  16,025.11 

Hospital,  including  grounds  and 

other  buildings _ 5,330.04 

Drving  House,  etc 468.83 

Public  School  House -..     1,654.85 

Recitation  Hall  „ _ 2,283.28 

Music  Hall  _ 184,16 


Total  cost  of  new  buildings $101,872.42 

Repairs  on  Buildings: 

Hadley  Hall  $1,559.24 

Girls'  and  Boys'  Dormitory 4,854.68 


SPECIAL  REVENUE  COMMISSION  235 

Science  Hall  89.15 

Plumbing  and  heating,  not  located  303.46 

Electric  apparatus  _ 50.88 

Bradley  House  84.24 

Seed  House 18.39 

Green  House,  Hot  Houses,  etc 561.60 

Cook  House  85.35 

Plumbing  in  Laundry 54.40 

Hog  Houses 6.48 

Lumber  for  general  repairs _ 309.18 

Push  Button  system 103.27 

A\\Tiings 78.95 


Total  repairs  to  buildings $     8,159.27 

Improvements  to  Grounds: 

Fences  $  4,972.98 

Sewer  system  12,387.98 

College  Well  and  Pump 3,039.62 

Irrigation  system 8,848.51 

Trees  and  Shrubs 668.96 

Double  Beam  Scale 51.00 

Gas  Storage  Tank 100.00 

Road  Repairs ...._.. 42.75 

Drinking  Fountain 50.00 

Dipping  Vats 750.00 

Target  Range 103.69 

Smoke  House  10.00 

General  Miscellaneous  51.48 

Iron  Railings  48.75 

Campus  Ornaments :...  143.45 

Lamp  Pedestals  63.10 

Drainage 70.05 

Blasting  Earth 37.50 

Lumber 25.03 

Miscellaneous  Extension  Div 29.35 

Eleven  Pieces  of  Pipe 27.50 

Race   Track 61.70 

Tennis  Court  974.57 

Feed  and  Water  Troughs  75.54 

Piping  Water  24.25 

Sheep  Hurdles  - 21.40 


Total  Improvements  to  grounds ^  32,678.67 


236  REPORT  OF  THE  NEW  MEXICO 

New  Buildings $101,872.42 

Repairs 8,159.27 

Improvements  to  Grounds 32,678.67 

Grand  Total $142,710.36 

Deducting  from  this  amount  all  of  the  items  for 
repairs,  and  all  of  the  improvements  on  the 
grounds  except  the  sewer  system  and  irriga- 
tion system,  aggregating  in  all 30,000.00 


would  leave    the   net   amount   for  buildings 

and  improvements  $112,710.36 

Add  to  this  amount  the  sum  of  money  spent  for 

live  stock  23,000.00 


and  you  will  have  the  net  amount  involved  in 
the  program  for  improvement,  this  amount 
aggregates $135,710.36 

A  pretty  large  program  with  only  one  tenth  of  that  amount 
provided  for  by  the  legislature. 

From  an  examination  of  the  vouchers  it  appears  that  there 
is  no  decided  system  of  approving  them.  The  bills  are  sent  in 
by  the  head  of  the  department  from  which  they  originate,  are 
vouchered  and  signed  by  the  president  of  the  college  and  the 
treasurer  of  the  board  of  regents. 

In  an  institution  covering  such  a  wide  field,  and  managed 
under  several  distinct  departments,  the  utmost  care  should  be 
given  to  every  item  of  expense  to  see  that  the  bill  is  rendered 
for  the  right  amount  of  goods  furnished  or  labor  performed, 
and  in  the  proper  sums. 

The  following  table  shows  the  source  of  receipts  and  the 
classified  purposes  for  which  disbursements  have  been  made : 

Receipts : 

Balance  on  hand  to  the  credit  of  the  college 

June  1,  1916  $  80,420.43 

Federal  appropriations  $467,652.31 

State  Auditor  Warrants  325,961.80 

Interest  on  Deposits 2,041.12 

Borrowed  Money  143,743.39 

Income  State  Lands  96,800.08 

Registrar,  Dormitory,  etc 184,083.63 

State  Council  of  Defense 81,768.04 

County  and  State  Extension 133,414.65 


SPECIAL  REVENUE  COMMISSION  237 

Insurance  receipts  and  transfers 6,832.20 

Transfers  from  college  funds 240,935.78    1,685,232.99 


Total  to  be  accounted  for $1,763,653.42 

Disbursements : 

Automobile  $     9,528.21 

Dormitory :..... 86,572.86 

Salaries  515,059.40 

Labor  71,724.45 

Printing .; 28,332.79 

Postage  3,840.12 

Telegraph  and  Telephone  7,202.05 

Office  Supplies  26,399.08 

Freight  and  Express  12,860.11 

Fuel,  Light  and  Water  15,864.49 

Feed  Stuffs  59,488.50 

Seeds  and  Plants 3,874.31 

Furniture  and  Fixtures 8,689.32 

Drugs  and  Medical 3,686.46 

Library  6,628.70 

Tools  and  Machinery  10,554.52 

Scientific  Apparatus 24,051.76 

Live  Stock  24,196.54 

Travel,  County  Extension 98,586.76 

Travel,  othern  than  above 59,255.46 

Upkeep 74,093.80 

New  Buildings 101,872.42 

Real  Estate  Improvements  40,837.94 

Sales 25,669.25 

Military  8,291.07 

Athletics,  Music,  etc 8,066.01 

Insurance 7,741.24 

Funeral  Expense 106.50 

Interest  on  borrowed  money  3,071.38 

Bonds  of  employees  790.90 

Audit  of  books 1,412.45 

Rent  to  Y.  M.  C.  A 200.00 

Advanced  to  Cashier  32,000.00 

Loans  repaid  _ 163,355.59 

Miscellaneous  35.03 

Wetlaufer  Shortage  1.778.38 

Llewellyn  Shortage  67,740.37 

Transferred  to  College  funds 240,935.78 

Total  Payments  $1 .834.304.90 

Overdraft  or  Deficit,  Juno  30,  1920  $      70.651.48 


238  REPORT  OF  THE  NEW  MEXICO 

"Note:  The  Wetlaufter  shortage  was  a  i-eal  one,  and  after 
repeated  efforts  and  consequent  failure  to  collect  the  aniooint 
was  charged  off,  thus  being  a  direct  loss  to  the  college." 

"Note :  The  Llewellyn  shortage  appearing  above  as  a  pay- 
ment, is  accounted  for  by  the  fact  that  the  book  balance  of 
$80,420.43  existing  June  1,  1916,  included  this  amount  as  being 
on  hand  when,  of  course,  as  a  matter  of  fact  it  was  tied  up 
in  the  failure  of  the  Union  State  Bank  of  Las  Cruces.  The 
college  accounting  authorities,  feeling,  doubtless,  that  their 
books  should  not  carry  this  as  an  amount  on  hand,  deducted 
it  from  such  cash  balance  and  to  do  so  it  necessarily  had  to 
appear  as  a  payment.  This  audit  pursued  the  same  course  for 
purposes  of  uniformity,  although  the  matter  could  have  been 
more  easily  handled  by  other  methods." 

From  the  foregoing  statements  it  will  be  observed  that 
the  net  overdraft  is  $70,651.48.  The  only  fund  actually  over- 
drawn was  the  State  fund,  deducting  the  balance  in  the  other 
funds  from,  that  overdraft,  gives  the  net  overdraft  as  sho\\Ti. 

The  audit  covers  a  period  of  forty  nine  months  from  June 
1,  1916,  to  include  June  30,  1920.  The  records  of  the  Board  of 
Regents  show  that  there  w^ere  two  Boards  of  Regent  during  the 
period  covered;  on  June  1,  1916,  the  board  consisted  of  Messrs. 
R.  R.  Larkin,  J.  A.  Mahoney,  C.  W.  Garber  and  P.  F.  McCanna, 
who  served  until  March  9,  1917.  Dr.  Ladd  was  President  of 
the  College  during  that  period.  The  new  board  appointed  by 
Governor  W.  E.  Lindsey,  March  10,  1917,  w'as  composed  of 
Messrs.  James  S.  Quesenberry,  Charles  L.  Hill,  E.  C.  Cramp- 
ton,  R.  E.  Putney  and  M.  Y.  Monical.  This  board  did  not 
qualify  until  March  19th.  Dr.  Ladd  was  relieved  of  his  duties 
as  president  April  10,  1917,  and  Dr.  A.  D.  Crile  was  elected  to 
succeed  him.  Dr.  Crile  continued  as  president  until  March  22, 
1920.  Mr.  R.  E.  Putney  retired  from  the  board  July  9,  1917. 
Mr.  Monical  remained  until  March  14,  1919,  while  Messrs. 
Quesenberry,  Hill  and  Crampton  remained  until  the  close  of 
the  period  of  audit,  June  30,  1920. 

In  order  to  locate  the  period  in  which  the  deficit  occurred 
the  following  table  showing  the  financial  condition  of  the  insti- 
tution for  the  periods  June  1,  1916,  March  31,  1917  and  June 
30,  1919  clearly  locates  the  period  in  which  the  overdraft  and 
deficit  occurred. 

Balance  on  hand  June  1,  1916 $      80,420.43 

Collections  to  March  31,  1917 250,853.82 


Total  331,274.25 


SPECIAL  REVENUE  (SOMMISSION  239 

Disbursements  to  March  31,  1917  268,518.21 

Balance  on  hand  March  31,  1917 62,756.04 

Total  deductions  in  cash  during  the  period 

June  1,  1916-March  31,  1917 17,664.39 

Balance  on  hand  April  1,  1917 62,756.04 

Collections  to  June  30,  1920 1,432,379.17 

Total 1,495,135.21 

Disbursements  during  the  period 

April  1,  1917- June  30,  1920 1,565,786.69 

Deficit  to  balance  70,651.48 

The  only  account  actually  effected  by  the  deficit  is  the 
State  Fund.  The  status  of  the  State  Fund  on  the  three  dates 
referred  to  above  is  as  follows : 

June  1,  1916,  this  fund  was  overdrawn 1,925.01 

Receipts  to  March  31,  1917 53,678.47 

Total 51,753.46 

Disbursements  : 52,409.20 

Deficit  March  31,  1917 655.74 

Net  reduction  of  Deficit 1,269.27 

Deficit  April  1,  1917 653.74 

Receipts  to  June  30,  1920 599,743.48 

Total 599,089.74 

Disbursements  - 695,574.88 

Deficit  June  30,  1920 96,485.14 

Net  increase  in  deficit $       95,831.40 

The  following  table  shows  the  condition  of  each  fund  at 
the  beginning  of  the  period  audited,  the  amount  received  in 
each  fund  during  the  period  covered  by  the  audit,  the  pay- 
ments made  from  each  fund  and  the  balances  at  the  close  of 
the  period  June  30,  1920: 


240 


REPORT  OF  THE  NEW  MEXICO 


Fnnd 


Bftl.  June 
1,  1915 


Receipts 
Transfers 


Llewellyn  $74,732.01 

Wetlaufer  1.682.49 

Animal    Husb 95.89 

Registrar  Acct 2,603.95 

Loans    Due   19,612.20 

Hatch   Suppl 2,004.17 

Treas.    Shortage 

Federal   S-L  3,654.20* 


28,718.83* 
T97.09* 
1,201.97* 
69.96 
11,821.35 


Morrill  

Hatch  ; 

Adams   .. : 

State    S-L    

Income  

State  Station  2,006.13 

Permanent 1,401.98 

College  Extn 298.24* 

State    1,923.01* 

County  Exten 1,079.53 

War  Emergency  

S-L  Suppl 

State    Exten 

Smith  Hughes  

Extn.  Suppl 

Fed.  S-L  Suppl 

State  S-L  Suppl 


2,441.77 
13,743.39 
33,086.54 
40,212.56 
97,790.68 

234,810.70 
64,342.78 
63,618.90 
43,371.51 

110,795.83 
37,368.87 

450.18 

653,421.95 

165,812.76 

25,030.08 

3,199.16 

74,592.66 

10,361.92 

1,618.83 

8,533.02 

8,533.02 


Payments 
Transfers 

74,732.01 

1,682.49 

95.89 

5,045.74 

33,355.59 

23,518.26 

40,212.56 

94,136.48 

206,091.87 

63,545.69 

43,441.47 

122,617.18 

26,939.80 

1,401.98 

151.94 

747,984.08 

156.199.66 

25,030.08 

3,199.16 

74,592.66 

10,361.92 

485.45 

8,533.02 

8,533.02 


Bal.  June 
80,  1920 


$11,573.45 


2,435.20 


96,485.14* 
10.692.63 


1,133,38 


Total 


$80,420.43     $1,683,232.99     $1,834,304.90     $70,651.48 


* — Indicates  overdraft. 


Balances  in  Funds  June  30,  1920,  as  Follows: 

Hatch  Supplemental  $11,572.45 

State  Station  2,435.20 

County  Extension 10,692.63 

Extension  Supplemental  1,133.38 

State  Fund,  OverdraA\Ti ,. 

Net  Overdraft  June  30th $70,651.48 


$96,485.14 


The  complete  report  contains  many  tables  showing  receipts 
and  disbursements  for  each  fund ;  receipts  and  disbursements 
by  months;  reconciliation  statements  between  the  treasurer 
and  the  banks ;  lists  of  outstanding  unpaid  checks ;  list  of  mem- 
bers of  the  faculty  and  salary  of  each;  scrip  book  refunds, 


SPECIAL  REVENUE  COMMISSION  241 

etc.,  but  I  have  not  deemed  it  necessary  or  desirable  to  include 
them  in  this  summary. 

Respectfully  submitted, 

H.  F.  STEPHENS,  Auditor. 


I 


242  REPORT  OF  THE  NEW  MEXICO 

APPENDIX  XI. 

TEACHERS'  SALARIES,  1919-1920. 

According  to  compilations  made  from  the  Educational 
Directory,  issued  by  the  State  Department  of  Education  for  the 
school  year  1919-1920,  there  are  2605  teachers  in  New  Mexico 
including  superintendents  and  principals.  These  teachers  are 
distributed  among  the  various  counties  with  average  annual 
salaries  for  each  county  as  follows: 

Counties  Number  Teachers        Average  Salaries 

Bernalillo 162 $1,136.42 

Chaves  118 974.23 

Colfax 149 1,004.59 

Curry  103 935.24 

DeBaca 39 912.29 

Dona  Ana  112 940.92 

Eddy 84 - 932.20 

Grant 154 1,024.21 

Guadalupe 84 690.30 

Lea  56 793.32 

Lincoln 79 880.85 

Luna 57 1,010.53 

McKinley 33 1,250.12 

Mora -..  91 593.68 

Otero - 79 897.00 

Quay 120 901.66 

Rio  Arriba  _.114 582.00 

Roosevelt 98 711.92 

Sandoval  36 661.22 

San  Juan 48 794.54 

San  Miguel  154 690.55 

Santa  Fe  _ 96 727.24 

Sierra  31 664.52 

Socorro 113 723.92 

Taos 92 611.44 

Torrance  78 759.00 

Union  164 656.04 

Valencia 61 788.24 

State 2605 $839.89 

Four  superintendents  receive  salaries  of  $3,000  or  over; 
ten  receive  from  $2500  to  $3000 ;  nineteen  from  $2000  to  $2500 ; 
thirteen  from  $1750  to  .$2000;  forty-five  teachers  and  nrin- 
cipals  receive  from  $1500  to  $1750;  133  receive  from  $1250  to 


SPECIAL  REVENUE  COMMISSION  243 

$1500:  304  from  $1000  to  $1250;  490  from  $900  to  $1000;  419 
from  $800  to  $900 ;  428  from  $700  to  $800 ;  350  from  $600  to 
$700;  221  from  $500  to  $600;  125  from  $400  to  $500;  41  from 
$350  to  $400  and  three  receive  less  than  $350.  It  will  be  seen, 
therefore,  that  about  20  per  cent  of  teachers,  principals  and 
superintendents  receive  $1000  or  over;  about  50  per  cent  re- 
ceive $700  to  $1000  and  approximately  30  per  cent  receive 
less  than  $700.  Comparing  these  figures  with  1912-1913  we 
find  that  seven  years  ago,  133  teachers  received  less  than  $200 
annually;  605  received  less  than  $300  each  and  only  389  re- 
ceived over  $600.  In  other  words  in  1912-13  less  than  25  per 
cent  of  the  teachers  received  over  $600  while  for  the  present 
year  85  per  cent  are  receiving  over  $600. 

The  average  annual  salary  of  teachers  for  the  state  is 
$839.89  as  compared  with  $438.01  in  1912-13.  In  the  eight 
incorporated  cities,  325  teachers  receive  a  naverage  salary  of 
$1196.33.  This  includes  superintendents  and  it  is  probable 
that  the  average  for  grade  teachers  will  about  be  $1000  and 
for  high  school  teachers  about  $1250.  In  the  rural  schools  th^ 
average  salaries  range  from  $400  to  $1000  according  to  the 
grade  of  certificate  held  by  the  teacher  and  also  according  to 
the  length  of  the  term.  Fourteen  teachers  with  special  certi- 
ficates receive  $1244  annually. 

The  168  principals  and  teachers  holding  professional  cer- 
tificates receive  an  average  of  $1104.96.  First  grade  certifi- 
cate teachers  of  whom  there  are  1414  receive  an  average  of 
$862.13.  Second  grade  teachers,  numbering  459,  receive  $575.17 
and  the  185  third  grade  teachers,  $452.51.  There  are  forty 
teaching  permits  whose  average  salaries  are  $396.56. 

The  average  number  of  months  of  school  for  the  state  is 
8.47  months.  One  county,  Grant,  has  an  average  of  over  nine 
months.  Bernalillo,  Chaves,  Colfax,  DeBaca,  Dona  Ana,  Eddy, 
Lincoln,  Luna,  McKinley,  Otero,  Quay,  San  Juan,  Santa  Fe, 
Socorro  and  Valencia  have  practically  nine  months  of  school 
in  the  term.  Curry,  Lea,  Roosevelt,  Sandoval,  San  Miguel, 
Sierra  and  Torrance  average  between  eight  and  nine  months. 
Only  five  counties,  Guadalupe,  Mora,  Rio  Arriba,  Taos  and 
Union  have  an  average  of  less  than  eight  months,  tlie  lowcsl 
being  Rio  Arriba  with  7l/i  months. 

The  low  salaries  prevail  in  counties  having  short  terms 
and  low  grade  certificate  teachers  as  is  evidoiiccd  from  what 
has  been  sho'WTi  above  and  from  the  following  table  showing 
in  the  first  column  the  teachers  holding  first  grade  certificates 
or  better,  in  the  second  column  those  holding  second  grade 
certificates  and  in  the  third  those  holding  third  gi-ade  certifi- 
cates and  permits. 


244  REPORT  OF  THE  NEW  MEXICO 


Counties 

First  Grade 

Second  Grade 

Third  Grade 

or  better 

and  permits 

Bernalillo 

149 

7 

6 

Chaves 

118 

0 

0 

Colfax 

141 

6 

2 

Curry 

98 

5 

0 

DeBaca 

36 

3 

0 

Dona  Aana 

95 

14 

3 

Eddy 

84 

0 

0 

Grant 

153 

0 

1 

Guadalupe 

33 

24 

27 

Lea 

45 

7 

4 

Lincoln 

69 

10 

0 

Luna 

55 

2 

0 

]\IcKinley 

30 

3 

0 

Mora 

32 

37 

22 

Otero 

71 

8 

0 

Quay 

91 

29 

0 

Rio  Arriba 

47 

34 

33 

Roosevelt 

76 

20 

2 

Sandoval 

19 

14 

3 

San  Juan 

43 

3 

2 

San  Miguel 

57 

47 

50 

Santa  Fe 

64 

32 

0 

Sierra 

20 

5 

6 

Socorro 

72 

28 

13 

Taos 

38 

44 

10 

Torrance 

56 

14 

8 

Union 

94 

46 

24 

Valencia 

35 

17 

9 

Total  1921  459  225 

That  conditions,  not  only  as  to  salary  but  also  as  to  quali- 
fications have  improved,  is  shown  by  the  fact  that  in  1913-14, 
46  per  cent  of  the  1803  teachers  and  principals  employed  held 
second  and  third  grade  certificates  and  permits,  while  for  the 
year  1919-20  only  26  per  cent  of  the  teachers  hold  these  low 
grades  of  certificates.  That  there  is  still  considerable  room 
for  improvement  it  evidenced  by  the  fact  that  of  1865  teachers 
in  the  rural  schools,  753  taught  upon  second  or  third  grade 
certificates  or  permits;  that  is  about  three-sevenths  of  the 
rural  school  teachers  and  more  than  one-fourth  of  all  held 
these  very  low  grade  qualifications.  Only  five  per  cent  of  the 
rural  school  teachers  hold  professional  certificates. 

An  examination  of  646  sets  of  answers  to  questionaires 
sent  out  by  the  State  Superintendent  of  Public  Instruction  re- 


/ 


SPECIAL  REVENUE  COMMISSION  245 

suits  in  some  interesting  figures  from  which  valuable  con- 
clusions may  be  drawn  by  those  thoroughly  familiar  with 
conditions. 

Of  the  646  teachers  replying  to  the  questionaire,  410  have 
dependents,  214  are  married,  and  323  live  at  home ;  73  hold 
professional  certificates ;  315  first  grade ;  148  second  grade ; 
61  third  grade ;  11  permits ;  and  34  city  certificates. 

The  average  salary  for  1919-1920  for  those  reporting  was 
$818.00  and  the  average  annual  living  expenses  amount  to  $605 
for  the  whole  state.  381  reported  a  total  of  $234,820  earned  in 
1917-18,  and  the  same  teachers  earned  a  total  of  $334,308  in 
1919  20;  an  increase  of  $99,488  or  42%.  298  teachers  reported 
total  living  expenses  $150,851  in  1917-18,  and  $198,157  in  1919- 
20,  an  increase  of  $47,306  or  32%.  In  this  connection  attention 
is  called  to  the  fact  that  the  average  salarv  for  all  teachers 
in  the  state  in  1912-13  was  $438  and  $840  in  1919-20. 

The  646  teachers  replying  to  the  questionaire  were  dis- 
tributed by  counties  as  follows:  Bernalillo  20,  Chaves  22, 
Colfax  56,  Curry  19,  DeBaca  12,  Dona  Anna  34.  Eddy  18, 
Grant  25,  Guadalupe  23,  Hidalgo  8,  Lea  9,  Lincoln  23,  Luna 
15,  McKinley  5.  Mora  40,  Otero  11,  Quay  29,  Rio  Arriba  42, 
Roosevelt  17,  Sandoval  16,  San  Juan  9,  San  Miguel  58,  Santa 
Fe  25,  Sierra  5,  Socorro  18,  Taos  31,  Torrance  20,  Union  18, 
Valencia  18.  The  total  646  constitutes  practically  25  per  cent 
of  the  teaching  force  of  the  state. 


246  REPORT  OF  THE  NEW  MEXICO 

APPENDIX  XII. 
RAILROAD  ASSESSMENT  FOR  1920. 

ATCHISON,  TOPEKA  &  SANTA  FE. 

Rate  TotaJ 

Mileage     Per  Mile  Valuation 

Main  line.  Colorado  state  line  to  Isleta 262.72     $48,200     $12,663,104 

Main  line,  Isleta  to  Texas  line 221.22       35.000  7.742,700 

Rocky  Mountain  maine  line 

Dillon  to  Des  Moines 44.44      20,350  904,354 

Preston  to  Ute  Park 46.85       20,350  953.398 

Hebron-Preston    branch   4.34      20,350  88,319 

Santa  Fe  branch  18.10      18,350  332,135 

Magdalena  branch  .,..._ 27.36      17,350  474,696 

Lake  Valley  branch 13.31        8,000  106,480 

Rincon-Deming  braach  54.31       20,350  1,105.209 

Deining-Silver  City  branch - 46.56       20,350  947,496 

Whitewater-Santa  Rita  branch  - 17.84      20,35^  363,044 

Hanover  Junction-Fierro  branch 6.18      20,350  125,763 

Blossburg  Spur  ..- r - .-.- 3.47       10,000  34,700 

Preston-Van  Houten  Spur   3.50       10,000  35.000 

Koehler  Spur 3.47       10,000  34,700 

Hot  Springs  Spur  .;..;..... 6.20         6,000  37,200 

Cerillos  Spur ..-. 4.69       lO.OCTO  46,900 

Belen  Cut-Off,  Texas  to  Belen  248.22       48.200  11,964,204 

Pecos  Valley  branch,  north  of  Carlsbad         184.19       21,225  3,909.433 

Pecos  Valley  branch,  south  of  Carlsbad 33.00       16,000  528,000 

Coast  lines,  Arizona  to  Dalies  154.29       48,600  7,498.494 

Dalies  to  Belen  10.02       48,200  482.964 

Dalles  to  Isleta  14.72       48.200  709.504 

Coast  line,  second  track 53.74       12,000  644,880 

Gallup   Spur 12.44       10,000  124,400 

Raton  to  Colorado,  second  track  7.48       10.000  75,800 

Albuquerque  to  Hahn,  second  track  2.40       10.000  24.800 

Fox  to  Glorieta.  second  track  4.98       10,000  49,800 

Total - $52,006,677 

Terminal   Property: 

Albuquerque  $  1,046.085 

Aabajo  - - -.- 162,548 

Belen 234,202 

Clovls 484,829 

Deming - 30,718 

Lamy  ._ _ _ - 47,583 

Las  Vegas 185,000 


SPECIAL  REVENUE  COWTMISSION 


247 


Raton  

Riucon 

Roswell  _ 

Silver  City 

San  Marcial  ._ - 

Vaughn  ._  _ 

Gallup  (outside  city) 
Gallup   (city)    ....- 


309,083 

14,161 

14,136 

1.826 

65,711 

179,672 

175,065 

99.500 


Total  $3,050,168 

Grand  Total  _ _ _ $55,056,845 

EL  PASO  &  SOUTHWESTERN   SYSTEM. 


Mileage 

Main   line 415.36 

Da-wson  ._  .,.;. 131.98 

Deming   - 31.54 

Capitan 21.30 

Jarilla    _ 4.72 

Alamogordo  and  Sacramento  - 31.23 


Rate  Total 

Per  Mile     Valuatlori 

$45,000     $18,691,200 
3,695,440 


28,000 
18,000 
11.385 
11,385 
11.385 


Total 


Terminals: 

Tucumcarl 
Carrizozo  .. 
Duran  


567.720 

242,500 

53,737 

355,554 

..$23,606,151 

..$  55,000 
44,000 
11,000 


Total    _ %      110,000 

Pipe  line  _ - $      456,07X) 


Grand    Total 


$24,172,221 


ARIZONA  A   NEW    MEXICO. 

Rate  Total 

Mileage     Per  Mile     Valuation 

Main  line  66.28     $21,000     $  1,391.880 

Lordsburg  branch  - - ~ 98      11,385  11,157 

"85"   Spur  _ - - - 3-67       11.385  41.782 


Total 


$   1,444,819 


CHICAGO,   ROCK   ISLAND  &  PACIFIC. 

Rate  Tota' 

Mileage     Per  Mile     Vnhi.Ttlon 

Main  line,  Santa  Rosa  to  Tucumcarl  59.87     $42,000     $  2,514.540 

Tucumcarl  to  state  line  - - 51.63       36.345         1.891,981 

Amarillo  line  -'. - 41*6       28.000        1,160.880 


Total  -■- - *  5.567.401 


248  REPORT  OF  THE  NEW  MEXICO 

COLORADO  SOUTHERN. 

Rate  Total 

Mileage     Per  Mile     Valuation 

Colorado  line  to  Texas  line  83.86     $28,000     $  2,334,080 


Total  $  2,334,080 


CONTINENTAL   TIE   &    LUMBER   CO. 

Rate  Total 

Mileage     Per  Mile  Vahiation 

Branch  line  5.00     $  2,500  $        12,500 


Total $        12,500 

CIMARRON  &  NORTHWESTERN. 

Rate  Total 

Mileage     Per  Mile     Valuation 

Main  line 22.00     $  6,000     $      132,000 


Total  : $      132,000 

DENVER   A    RIO   GRANDE. 

Rate  Total 

Mileage     Per  Mile    Valuation 

Main    line    189.60     $14,000  $  2,654,400 

Durango  to  Farmington     28.90       16,000  462,400 

La  Madera  Lumber  branch 16.43         3,000  49,200 

Rails  leased  to  Halleck-Howard  Lumber  Co 15,000 

Terminal  at  Chama - 25,000 


Total  : $  3,206,090 

M'QAFFY   COMPANY. 

Rate  Total 

Mileage     Per  Mile     Valuation 

Main    line 11.40     $  3,960     $        45,144 


Total    , $  45,144 

M'KINLEY    LAND    &    LUMBER    COMPANY. 

Rate  Total 
Mileage     Per  Mile     Valuation 

In  McKinley  county  10.00     $  3,960     $  39,600 

In   Valencia  county 44.00         2,500  110,000 

Total $  149,600 


SPECIAL  REVENUE  COMMISSION  249 

NEW    MEXICO    CENTRAL. 

Rate  Total 

Mileage     Per  Mile  A'aluation 

Main    line    .,.„ 115.70     $  4,000  $      462,800 


Total  $      462,800 

NEW    MEXICO    MIDLAND. 

Rate  Total 

Mileage     Per  Mile     Valuation 

Branch    line 10.00     $10,000     $      100,000 


Total  $      100,000 

SANTA  BARBARA  TIE  &  POLE  COMPANY. 

Rate  Total 

Mileage     Per  Mile     Valuation 

Branch  line 11.9     $  2,500     $        29,750 


Total  $        29,750 

SOUTHERN  PACIFIC. 

Rate  Total 

Mileage     PerMilt^     Valuation 

Main  line  167.905     $58,000     $  8,059,440 

Terminal,  Lordsburg 130,000 

Terminal,   Deming   58,500 


Total $  8,247,940 

RIO    GRANDE    &    SOUTHWESTERN, 

Rate  Total 

Mileage     Per  Mile     Valuation 

Main    line    33.00     $  3,000     $        99,000 


Total $        99.000 

SANTA   FE,   RATON  &    EASTERN. 

Rate  Total 

Mileage     Per  Mile    Valuation 

Main  line  9.40     .$  7,500     %        70,500 


Total  ...  ,. , ; $        70,500 

SANTA    FE,   RATON   &    DES    MOINES. 

Rate  Total 

Mileage     Per  Mile     V.nlu.ntion 

Mainline  10.00     |  5,000     $        50.000 


Total  $        50,000 


250  REPORT  OF  THE  NEW  MEXICO 

CITY  ELECTRIC  COMPANY   (Albuquerque). 

Rate  Total 

Mileage     Per  Mile    Valuation 

Main  line  7-30     %  7,500     $        54,750 

Total  - $        54.750 

LAS  VEGAS  TRANSIT  COMPANY. 

Rate  Total 

Mileage     Per  Mile     Valuation 

Main  line  3.70    %  3,650     $       13,505 

Total  - $        13.505 

TRINIDAD    ELECTRIC   TRANSMISSION    RAILWAY 

&  GAS  COMPANY. 

Rate  Total 

Mileage     Per  Mile     Valuation 

Main  line  - 42.94     $  1,650     $        70,851 

Total -$       70,851 


SPECIAL  REVENUE  COMMISSION  251 

APPENDIX  XIII. 

RAILROAD  TAXES. 

The  significance  of  the  revenue  derived  from  railroad  tax- 
ation for  state,  county  and  other  political  subdivisions  is 
evident  from  figures  showing  that  the  valuation  of  railroad 
property  for  taxation  amountel  to  26.4  per  cent  of  the  assess- 
able property  of  the  state  in  1918.  In  some  of  the  counties  the 
proporition  of  railroad  property  to  the  total  valuation  was 
shown  to  be  as  high  as  50  per  cent  and  even  higher. 

Still  more  striking  are  certain  compilations  made  showing 
comparisons  of  taxes  actually  paid  by  transportation  lines  in 
New  Mexico  with  the  total  taxes  charged.  The  total  taxes  due 
for  1918  was  $6,476,200.32  on  state,  county,  municipal  and 
school  district  levies,  not  including  taxes  on  special  classes  of 
property.  On  the  basis  of  88%  tax  collections  as  shown  by 
last  reports,  the  amount  actually  paid  was  approximately  $5,- 
700,000.  Of  this  amount  the  Santa  Fe  railroad  paid  $936,907, 
or  very  nearly  one  sixth,  while  its  valuation  is  over  one  seventh 
of  the  total  valuation  of  the  state.  On  the  basis  of  actual  tax 
paid,  this  road  paid  16  2-3  per  cent  of  the  taxes  actually  col- 
lected. Seven  railroads  paid  a  total  of  $1,492,122,  fully  25 
per  cent  of  total  payments.  It  is  estimated  that  complete  fig- 
ures wall  show  that  transportation  lines  carry  over  one  fourth 
of  the  tax  burden  of  the  state. 

Selecting  one  of  certain  counties  for  which  complete  fig- 
ures were  available,  some  interesting  facts  were  found.  In  one 
county  where  there  is  only  one  railroad  system,  the  valuation 
of  the  line  constituted  forty-three  per  cent  of  the  total  valua- 
tion. It  paid  approximately  the  same  per  centage  of  general 
property  taxes  charged.  However,  this  county  collected  only 
85  per  cent  of  its  taxes  and  on  the  basis  of  actual  collections 
the  railroad  paid  47  per  cent.  It  paid  over  50  per  cent  of  the 
taxes  collected  for  state  and  county  purposes  and  in  certain 
school  districts  it  paid  a  still  higher  ratio.  For  instance,  in 
one  school  district  $1,292.70  was  levied  of  which  the  railroad 
paid  898.02.  In  another  district  $2,424.71  was  levied,  tlio  rail- 
road paying  $2,052.12.  Of  course,  there  were  certain  districts 
in  which  the  railroad  paid  in  less  proportion  and  other  dis- 
tricts have  levies  through  which  the  road  does  not  run.  Taking 
the  districts  having  railroad  property  together,  the  total  taxes 
charged  on  special  levies  amounted  to  $18,761.97  of  which  the 
railroad  paid  $8,417.07.  If  the  85  per  cent  eollection  estiinnle 
applies  to  these  districts,  the  road  paid  over  50  per  cent.  Of  tlie 
$72,000  levied  for  county  school  maintenance,  the  railroad  paid 
over  $30,000  which  was  nearly  half  of  the  amount  actually  col- 
lected for  this  purpose. 


262 


REPORT  OF  THE  NEW  MEXICO 


111  another  county,  where  the  railroad  valuation  in  1918 
consituted  practically  35  per  cent  of  the  total  valuation,  a  rail- 
road line  paid  $58,033.99  of  the  total  general  property  levy  of 
$148,540.93.  The  per  centage  of  taxes  collected  in  this  county 
was  92.53.  On  the  basis  of  actual  collections,  therefore,  the 
railroad  paid  42  per  cent.  For  county  and  county  high  school 
maintenance,  $38,000  was  le\aed  in  this  county  and  approxi- 
mately $35,500  collected,  the  railroad  paying  nearly  $15,000  of 
this  amount.  Taxes  were  levied  in  all  of  the  school  districts 
of  the  county  for  special  purposes  such  as  building,  interest 
and  sinking  funds.  The  total  of  such  levies  was  $8,724.39  of 
which  the  railroad  paid  $2,303.12.  On  the  basis  of  actual  col- 
lections, the  road  paid  probably  fully  25  per  cent  of  these  taxes; 
In  one  district  the  levy  was  for  $928.72,  the  railroad  paying 
$579.07 ;  in  another  the  road  paid  $144.47  of  the  total  $202.13 
levied ;  in  another,  $206.21  of  $270.12  le\'ied ;  in  another  $299.06 
of  $463.99  levied;  in  another,  195.17  of  $208.57  levied. 

Taxes  le\aed  upon  railroads  in  1919  amounted  to  $2,299,- 
603.49  which  was  25.73  per  cent  levied  upon  property  in  gen- 
eral. As  the  railroads  pay  taxes  fully  and  promptly  and  the 
collections  for  the  state  show  usually  a  10  per  cent  delinquen 
ey,  it  is  probable  that  for  that  year  the  railroad  paid  nearly 
30  per  cent  of  the  total  collection.  The  following  table  shows 
total  general  property  taxes  levied,  railroad  taxes  and  per 
cents  by  counties,  taxes  net  output  of  mines  not  included. 


Counties 

Total  Taxes 

R.  R.  Taxes 

% 

Bernalillo 

$    748,378.93 

$     78,688.84 

10.51 

Chaves 

532,437.19 

42,566.84 

7.99 

Colfax 

610,668.12 

132,289.26 

21.66 

Curry 

354,362.62 

85,852.86 

24.23 

DeBaca 

152,595.32 

76,774.28 

50.03 

Dona  Ana 

438,069.63 

172,949.70 

23.44 

Eddy 

275,274.33 

35,157.13 

12.77 

Grant 

562,175.06 

136,434.48 

24.27 

Guadalupe 

211,884.59 

102,915.75 

48.57 

Lea 

186,281.10 

1,885.70 

1.01 

Lincoln 

239,260.53 

90,102.17 

37.67 

Luna 

294,379.65 

143,911.54 

48.88 

McKinley 

254,940.11 

98,322.18 

38.56 

Mora 

243,366.22 

60,646.16 

24.92 

Otero 

298,866.63 

121,971.69 

40.81 

Quay 

369,495.16 

115,938.66 

31.38 

Rio  Arriba 

182,699.53 

40,069.62 

21.93 

Roosevelt 

220,958.30 

40,553.84 

18.35 

Sandoval 

93,957.42 

29,417.69 

31.31 

San  Juan 

160,841.74 

15,263.85 

9.49 

SPECIAL  REVENUE  COMMISSION  253 


San  Miguel 

548,063.87 

123,003.50 

22.44 

Santa  Fe 

305,377.92 

72,069.06 

23.60 

Sierra 

99,386.33 

30,195.37 

30.38 

Socorro 

424,896.53 

87,486.10 

20.59 

Taos 

124,592.77 

17,118.35 

13.74 

Torrance 

267,975.64 

131,022.89 

48.89 

Union 

427,404.91 

65,506.03 

15.33 

Valencia 

308,711.97 

151,489.97 

49.07 

Totals 

$8,937,302.12 

$2,299,603.49 

25.73 

254  REPORT  OF  THE  NEW   MEXICO 

APPENDIX  XIV. 

MEMORANDA  WITH  REFEFENCE  TO  ASSESSMENT  OF 
OMITTED  PROPERTY,  ETC. 

The  matter  of  omitted  property  and  undervaluations  is  of 
serious  importance  to  all  taxpayers. 

Property  omitted  from  the  assessment  roll  escapes  taxa- 
tion entirely  as  a  matter  of  course,  property  undervalued  es- 
capes to  the  extent  of  such  undervaluation  and  so  in  the  end 
it  is  a  matter  of  degree  only.  Taxapeycrs,  who  are  assessed  at 
the  full  value  of  their  property,  are  bearing  an  undue  and  un- 
just burden  of  the  cost  of  government  and  are  entitled  to  be 
relieved  of  such  an  intolerable  situation. 

The  present  statutory  law  will  not  permit  of  such  an 
equalization  of  the  tax  burden  as  is  contemplated  by  the  Con- 
stitution of  the  State.  The  power  now  conferred  upon  Boards 
of  County  Commissioners  to  fix  the  value  of  all  lands,  except 
grazing  lands,  results  in  a  blanket  valuation  of  farm,  mineral 
and  other  lands.  Such  methods  only  emphasize  and  bring  about 
the  present  inequalities  of  assessment. 

The  power  of  the  State  Tax  Commission  to  classify  and  fix 
the  value  of  all  grazing  land  in  the  various  sections  of  the  state, 
while  well  intentioned,  results  in  the  same  inequalities  of  assess- 
ment as  the  blanket  valuations  fixed  by  the  Boards  of  County 
Commissioners.  Thousands  of  acres  of  land  used  for  grazing 
purposes  have  a  sale  value  of  $5.00  to  $12.00  per  acre  and  are 
assessed  at  $3.75  per  acre.  Just  how  the  taxing  authorities 
can  justify  any  action  which  brings  about  an  assessment  of 
$3.75  on  $10.00  land  when  on  the  other  hand  buildings  and 
homes  in  cities  may  be  assessed  at  the  full  value  and  frequently 
are,  must  be  on  the  theory  that  capital  invested  for  one  pur- 
pose is  less  valuable  than  that  invested  for  another. 

The  power  of  the  State  Tax  Commission  to  fix  the  actual 
valuation  of  livestock  should  be  so  changed  as  to  permit  the 
fixing  of  minimum  valuations  instead.  Livestock  varies  in  kind 
and  character,  and  the  fixing  of  a  specific  valuation  on  a  cow, 
steer,  horse,  or  sheep,  to  apply  all  over  the  state  in  no  wise 
equalizes  the  assessment  but  rather  has  the  opposite  effect. 

A  tabulation  of  real  estate  transfers,  compiled  February, 
1920,  involving  6591  transfers  in  all  portions  of  the  state,  in- 
dicates that  the  ratio  of  assessment  to  sale  value  is  56%. 

Assuming  that  60%  is  nearer  correct,  if  all  real  estate  were 
assessed  at  actual  value  the  increase  would  be  over  $100,000,- 
000  on  both  city  and  rural  real  estate  and  not  including  mines 
or  mineral  lands. 

Experience  has  demonstrated  that  personal   property  is 


SPECIAL  REVENUE  COMMISSION  255 

assessed  at  no  greater  than  65%,  if  such  property  were  assessed 
at  actual  value  it  would  increase  the  assessment  $50,000,000. 

The  assessment  of  money,  notes,  credits,  etc.,  in  1919  was 
$992,808.  Twenty  times  the  amount  would  be  a  reasonable  esti- 
mate. Therefore,  an  increase  of  nineteen  or  twenty  millions 
could  be  obtained  if  all  such  property  were  assessed. 

As  to  omitted  property.  Many  counties  have  no  system  of 
land  checking  and  considerable  real  estate  must  necessarily  be 
omitted,  personal  property  also  escapes  in  its  entirety.  I  be- 
lieve that  no  less  than  ten  millions  of  dollars  is  now  escaping 
entirely. 

Stmmiary: 

Land $100,000,000 

Personal  property  50,000,000 

Money,  notes,  credits,  etc,    20,000,000 
Omitted  property 10,000,000 

Total  $180,000,000 

1919  Assessment  385,000,000 

Approximate  valuation  $565,000,000 
of  state,  not  duducting  exemptions. 

The  remedy  to  cure  these  defects  lies: 

First:    In  a  proper  law,  permitting  taxing  authorities 
to  determine  the  true  value  of  all  property,  re- 
gardless of  class. 
Second:    Qualified  assessors. 
Third:    Expert  tax  commissioners. 


256  REPORT  OF  THE  NEW  MEXICO 

APPENDIX  XV. 
MEMORANDUM  ON  CENTRALIZED  EMPLOYMENT. 

General : 

In  the  State  of  New  Mexico,  with  less  than  400,000  inhabi- 
tants, the  total  number  of  public  employees  in  the  state  gov- 
ernment cannot  be  very  large.  It  surely  does  not  exceed  2,000, 
and  probably  not  over  1,000,  this  including  employees  in  in- 
situtions  and  all  those  outside  of  the  central  offices  at  Santa 
Fe.  With  this  small  number  of  employees  it  would  be  unwise 
to  consider  any  sort  of  elaborate  centralized  control  of  em- 
ployment. Any  simple  system  which  will  eliminate  patronage 
and  make  appointment  and  promotion  dependent  upon  merit, 
should  solve  the  problem. 

Centralized  employment  control  may  A^ary  all  the  way 
from  elaborate  system  with  a  highly  paid  civil  service  com- 
mission and  a  highly  developed  organization  under  it,  consist- 
ing of  examiners,  organizers,  and  those  in  charge  of  the 
routine  administration  of  the  office,  to  a  very  simple  system 
consisting  of  a  single  superintendent  of  employment  who  will 
exercise  central  supervision  over  original  appointment  and  pro- 
motion. 

Classification  and  Standardization: 

Before  proceeding  to  outline  any  sort  of  a  system,  it  is,  of 
course,  necessary  to  know  just  what  constitutes  the  problem. 
In  other  words,  it  is  necessary  to  know  how  many  positions 
there  are,  what  kind  they  are,  and  what  salaries  attach  there- 
to. This  can  only  be  ascertained  from  a  fairly  detailed  inves- 
tigation. The  next  step  is  to  classify  these  positions;  that  is 
to  say,  to  group  those  positions  having  similar  duties,  respon 
sibilities,  and  entrance  into  classes,  and  to  give  such  classes 
standard  titles.  An  example  of  such  grouping  would  be  let- 
ter-carriers, switchmen,  laborers,  etc.  These  perfectly  simple 
examples  are  given  in  order  to  make  the  point  clear.  It  will 
be  more  difficult  to  group  into  classes  clerical  and  stenogra- 
phic positions  having'  the  same  duties,  responsibilities  ,and 
qualification  requirements,  but  such  grouping  must  be  made. 
In  addition  to  deciding  on  a  title,  the  specifications  of  the 
classes  must  be  prepared,  including  a  statement  of  the  duties 
of  the  positions  in  said  classes,  responsibilities  involved  and 
the  qualification  requirements  considered  essential  in  appli- 
cants for  positions  in  the  class. 

After  positions  are  grouped  into  classes,  they  are  further 
grouped  on  the  basis  of  degree  of  responsibility ;  that  is  to  say, 
positions,  the  duties  of  whose  incumbents  are  to  perform  rou- 


SPECIAL  REVENUE  COMMISSION  257 

tine  directed  work,  would  be  in  a  rank  lower  than  those  per- 
forming work  requiring  the  exercise  of  independent  judgment, 
and  again  lower  than  those  whose  duties  require  the  supervi- 
sion of  others. 

A  still  furtehr  grouping  of  classes  is  along  occupational  or 
functional  lines ;  for  example  inspeetionanl,  clerical  or  en- 
gineering. 

With  the  classification  completed,  the  next  step  is  to  deter- 
mine upon  a  standard  compensation  for  classes  of  positions. 
There  are  many  considerations  which  apply;  among  others  be- 
ing importance  of  the  duties  of  the  position,  the  degree  of  re- 
sponsibility exercised,  the  qualifications  required  for  entrance, 
the  opportunities  for  promotion,  what  other  employers  are  pay- 
ing, fairness  to  the  employee  and  tax  paying  public;  the  cost 
of  living,  and  other  economic  considerations. 

Kind  of  Cenrtal  Employment  Control  Desirable. 

When  the  classification  and  standardization  are  completed, 
there  is  some  basis  for  determining  on  the  kind  of  central  em- 
ployment control  desirable.  That  such  is  necessary  may  be 
proved  from  a  study  of  the  variation  in  rates  paid  to  similar 
kinds  of  positions  as  will  be  brought  out  in  the  classification 
study  even  if  it  is  not  well  known  in  advance  that  such  condi- 
tiions  exist.  In  addition  patronage  is  rampant  and  if  it  is 
really  desired  to  suppress  patronage,  central  employment  con- 
trol is  necessary. 

For  this  state,  with  its  small  population,  and  small  num- 
ber of  public  employees,  certainly  no  elaborate  system  is  need- 
ed. On  the  other  hand,  the  system  must  be  strong  enough  to 
prevent  abuses. 

Outline  of  a  Possible  System. 

Until  knowledge  of  present  conditions  is  gained  it  would  be 
foolhardy  to  attempt  to  set  up  a  definite  system.  Any  sugges- 
tions made  here  must,  of  course,  be  considered  off-hand  sug- 
gestions. 

A  simple  law  should  be  prepared  providing  for  central  em- 
ployment control.  It  should  provide  for  the  appointment,  per 
haps  ex-officio,  of  a  competent  person  to  give  part  time  to  the 
control  of  original  and  promotional  ai)pointments,  and  to  the 
proper  administration  of  the  classification  plan.  The  law  should 
also  provide  for  the  adoption  of  the  classification  and  stan- 
dardization plan  and  should  give  the  salaries  sot  np  therein,  or 
as  amended  from  time  to  time,  official  recognition  and  ap- 
proval. 

The  selection  of  a  competent  Employment  Superintendent 
may  present  a  problem.    If  a  budget  commission  should  be  j)ro- 


258  REPORT  OF  THE  NEW  MEXICO 

vided  for  by  legislation,  its  beci'otary  might  be  chosen  with 
the  idea  that  he  would  divide  his  attentions  between  budget 
and  employment  matters.  Certainly  neither  one  of  these  acti- 
vities would  require  full  time.  It  will  probably  not  be  possi- 
ble to  secure  a  man  who  has  had  experience  in  cither  budget 
or  employment  work  without  paying  a  high  salary,  and  it 
would,  therefore,  be  better  to  select  a  man  on  this  basis.  He 
should  probably  be  appointed  hy  the  Governor  with  the  con- 
sent of  the  Senate,  but  for  a  time  not  coincident  with  that  of 
the  Governor. 

Origmal  Appointment. 

Until  the  number  of  appointments  in  the  state  service  in- 
creases greatly  over  the  present,  it  should  probably  be  provided 
that  appointments  be  made  as  at  present,  by  department  heads, 
but  that  before  such  an  appointment  may  become  effective, 
notification  thereof  be  sent  to  the  central  employment  official, 
hereafter  called  the  Employment  Superintendent,  whose  duty 
it  should  be  to  examine  this  proposed  appointment  from  three 
angles : 

First :  As  to  whether  the  proposed  appointee  is  qual- 
ified to   fill   the  position. 

Second :  If  the  title  of  the  position  and  the  salary  pro- 
posed are  in  conformity  with  the  classification. 

Third :  If  the  appointment  is  necessary  and  for  the 
public  good. 

The  Employment  Superintendent  may  go  about  checking 
the  selection  in  several  different  ways.  He  can  simply  inter- 
view the  applicant,  or  he  may  go  to  the  other  extreme  of  sub- 
jecting him  to  a  comprehensive  test.  A  comparison  of  the 
title  and  the  proposed  salary  Avith  the  classification  will  satis- 
fy the  second  requirement.  The  difficulties  in  the  way  of  as- 
certaining whether  or  not  the  appointment  is  justiciable  and 
in  the  interest  of  the  public  good  are  at  the  present,  however, 
so  great  as  to  make  this  requirement  at  this  time  almost  impos- 
sible of  fulfillment. 

After  the  Superintendent  of  Employment  has  assured  him- 
self as  to  the  qualifications  of  the  applicant,  and  that  his  ap- 
pointment is  in  conformity  with  the  classification  and  stan- 
dardization, he  will  certify  him  for  appointment,  even  tho' 
under  this  plan  selection  is  left  with  department  heads,  it 
would  not  be  long  before  applicants  for  positions  would  dis- 
cover that  there  was  an  Employment  Superintendent  and  would 
make  application  direct  Anth  him.  Department  heads  learning 
this  would  soon  ask  the  Employment  Superintendent  to  make 


SPECIAL  REVENUE  COMMISSION  259 

their  selections  for  them  and  thus  centralized  employment  con- 
trol will  become  more  and  more  an  established  fact. 

Meritorious  Perfonnanc©. 

After  selecting  an  employee  upon  merit,  it  is  essential  that 
the  state  secure  from  him  satisfactory  ser\dce,  or  failing  in  this, 
that  the  state  remove  the  inefficient  employee  from  the  pay 
roll.  This  necessitates  the  keeping  of  records  of  the  quantity 
and  quality  of  work  of  the  individual  employees.  These  rec- 
orders, ordinarily  called  efficiency  records,  should  be  kept  in 
the  office  of  the  Employment  Superintendent,  and  the  depart 
ment  heads,  ^\dth  the  aid  of  their  subordinates,  should  report 
periodically  to  the  Employment  Superintendent  the  efficiency 
of  the  employees  in  their  respective  departments.  It  is  admitted 
in  advance  that  to  secure  efficiency  records  that  are  worth 
anything  is  most  difficult  of  accomplishment.  Many  attempts 
have  been  miserable  failures.  It  is  essential,  however,  that  the 
attempt  be  made,  and  that  accuracy  be  striven  for.  It  is  ob- 
vious that  the  keeping  of  efficiency  records  is  capable  of  al- 
most indefinite  development,  but  in  the  beginning  it  will  bo 
quite  sufficient  to  accept  what  might  be  called  the  "judg- 
ment" marks  of  the  superiors.  It  should  be  the  duty  of  the 
Employment  Superintendent  to  adopt  such  measures  as  will 
assure  substantial  uniformity  in  the  markings  of  the  different 
department  heads  for  positions  in  the  same  class. 

Promotion. 

Vacancies  in  the  higher  positions  should  be  filled,  so  far 
aspracticable,  by  promotion.  If  a  vacancy  occurs  in  one  of 
this  kind  of  positions,  the  department  head  should  notil^y  the 
{Employment  Superintendent,  sending  him  at  the  same  time  a 
list  of  the  employees  in  his  department  whom  he  thinks  are 
qualified  to  fill  the  vacant  position.  The  Employment  Super- 
intendent should  give  publicity  to  the  vacancy  and  notify  em- 
ployees in  other  departments,  who  think  themselves  qualiTied, 
to  make  application.  It  should  be  the  duty  of  the  Employment 
Superintendent  to  determine  the  eligiblity  of  the  various  ap- 
plicants. The  Employment  Superintendent  and  the  department 
head  together  should  work  out  the  form  of  test  which  they 
would  consider  proper  in  each  particular  instance.  This  form 
of  test,  as  in  the  case  of  original  entrance,  may  be  simph'  of* 
complex.  The  factors  which  should  always  be  considered, 
however,  are  the  applicant's  knowledge  of  the  duties  of  the 
higher  position,  his  past  efficiency,  and  his  length  of  service. 
The  relative  weights  of  these  subjects  will,  of  course,  bo  dif- 
ferent for  different  classes. 


2ft0  REPORT  OF  THE  NEW  MEXICO 

Advancement. 

Advancement    differs   from   promotion   in   that   it   means 
simply  increase  in  compensation  without  increase  in  responsi- 
bility.   It  should  be  provided  that  employees  performing  effi- 
cient work,  after  the  expiration  of  a  given  period,  should  re- 
ceive an  advance  in  pay.     Tliis  is  another  place  where  the 
efficiency  records  are  necessary.    In  the  working  out  of  stan- 
dard rates  of  compensation,  in  most  cases,   a  range,  rather 
than  a  single  rate  of  pay,  should  have  been  provided;  that  is 
to  say,  the  MINIMUM   and  MAXIMUM,   with   intermediate 
rates.    Appointment,  of  course,  should  always  be  at  the  mini- 
mum (with  certain  exceptions  which  need  not  be  considered 
here,)  and  advancement  will  be  from  rate  to  rate  within  the 
range  until  the  maximum  is  reached.    The  theory  upon  which 
such  a  scheme  is  founded  is  that  the  performance  of  the  duties 
of  a  position  are  worth  at  least  the  minimum  rate ;  that  as  an 
employee  becomes  more  familiar  with  the  duties,  his  value  in 
the  position  increases,  and  that  he  should  therefore  be  rewarded 
for  such  increased  usefulness  by  giving  him  a  periodical  ad- 
vance ;  further  that  so  long  as  the  employee  performs  the  same 
duties  (that  is  duties  w^hich  are  not  more  important  than  those 
w^hich  he  performed  when  he  was  originally  appointed),  he 
should  not  be  paid  any  more  than  the  maximum  rate  pre- 
scribed for  the  position,  no  matter  haw  efficiently  he  performs 
his  duties. 

Removal  from  the  Service. 

As  stated  above,  if  an  employee  is  inefficient  he  should  be 
removed.  There  are  two  distinct  schools  of  thought  on  the 
subject  of  removal.  One  believes  that  the  department  head 
should  have  practically  unrestricted  authority  in  this  regard, 
whereas  the  other  believes  that  there  should  be  no  discharge 
without  a  full  hearing  of  the  facts  on  both  sides  of  the  case. 
Without  going  into  the  merits  of  this  discussion,  it  is  believed 
that  for  New  Mexico,  discharge  should  be  left  with  the  depart- 
ment head,  but  that  he  should  be  required  to  prepare  and  for- 
ward to  the  Employment  Superintendent  a  statement  of  the 
reasons  for  making  the  discharge. 

Pension  Upon  Retirement. 

It  would  be  possible  to  elaborate  almost  ad  infinitum  on 
the  subject  of  incentives  in  employment,  but  this  is  not  the 
place  for  such  a  discussion.  It  is  sufficient  to  say  that  ques- 
tions of  pension  on  retirement,  employer's  representation,  train- 
ing of  employees,  bonus,  welfare,  and  related  subjects  must 
eventually  receive  the  attention  of  any  jurisdiction  employmg 


SPECIAL  REVENUE  COMMISSION  261 

a  large  number  of  workers.  Perhaps  none  of  these  are  press- 
ing now.  Undoubtedly  the  first  one  to  demand  attention  will 
be  pension  on  retirement.  This  is  an  enormous  subject  and  as 
you  probably  are  well  aware,  many  pension  schemes  have  come 
to  grief,  because  actually  unsound.  When  the  time  comes  to 
consider  such  a  problem,  it  should  be  left  to  experts  only. 

Benefits  of  Such  an  Employment  Plan. 

1.  For  the  employee: 

a.  Definite  knowledge  of  what  the  public  service  has 
to  offer. 

b.  Assurance  of  selection,  advancement  and  promo- 
tion on  merit. 

c.  Tenure  of  position  during  the  period  of  efficient 
service. 

d.  Provision  for  old  age. 

2.  For  the  department  head: 

a.     Partial  relief  from  task  of  making  selections  and 
promotions. 

3.  For  the  budget  commission  and  appropriating  body: 

a.     Standard  terminology  and  rates  of  compensation. 

4.  For  the  state: 

a.  Relief  from  patronage. 

b.  Better  service  from  employees. 

c.  Possibility  of  securing  short  ballot. 

BUREAU  OF  COMMERCIAL  ECONOMICS, 

P.  H.  Myers,  Manager,  System  Div. 
October  20,  1920. 


262  REPORT  OF  THE  NEW  MEXICO 

APPENDIX  XVI. 

COST  OF  STATE  QOVEENMENT. 

1919-1920. 

An  examination  of  the  State  Auditor's  reports  for  the 
past  ten  years  shows  payments  analyzed  below.  Considering 
the  total  payments  the  increase  amounts  to  $3,446,587.68,  or  382 
per  cent.  In  the  same  time  the  taxable  valuation  of  the  state 
has  increased  110  per  cent  and  the  population  only  10  per  cent. 
If  payments  be  deducted  which  are  included  in  the  expendi- 
tures for  schools,  state  institutions  and  for  investments  of  per- 
manent fund,  we  find  that  the  increase  in  the  cost  of  state 
government  rises  from  $503,383.23  to  $2,550,750.50,  or  nearly 
500  per  cent.  This  general  statement  is  derived  from  the  fol- 
lowing figures  showing  payments  from  state  funds. 

An  analysis  of  payments  made  through  state  treasury  fol- 
loM's: 

For  the  Cist  Territorial  year,  ending   November  30,   1910: 

.  General    Government $  163,119.23 

Protection  to  person  and  property  77,841.73 

Development — Conservation  Nat.  Resources  31,373.31 

Highways    70,819.29 

Charities,  Hospitals,   Corrections   215,226.68 

Education   231,633.72 

Principal  and   Interest  on   Public   Debt 108,628.02 

Permanent    Fund    ., 

Miscellaneous b;....  3,152.12 


Total _ %    901,794.10 


For  the  62nd  Territorial  year  ending   November  30,  1911: 

General  Government  .' $  155,798.54 

Protection  to  person  and  property  74,535.97 

Development — Conservation  Nat.  Resources  33,807.47 

Highways    90,391.29 

Charities,   Hospitals,  Corrections   205,140.08 

Education , 244,197.26 

Principal  and  Interest  on  Public  Debt 75,135.00 

Permanent  Fund  

Miscellaneous    * 53,530.10 


Total _._ .: %    935,355.71 


SPECIAL  REVENUE  COMMISSION  263 

For  esrd  Territorial  year  ending  November  30,  1912: 

General  Government „ ?  201,203.62 

Protection  to  person  and  property  57,127.60 

Development — Conservation  Nat.  Resources  55,647.17 

Highways    ._     ..„ _ 102 ,283.15 

Charities,   Hospitals,   Corrections   198,555.20 

Education 282,009.32 

Permanent  Funds  9,168.12 

Miscellaneous 41,044.46 

Principal  and  Interest  on  Public  Debt  227,062.66 

Total $1,174,101.30 

For  the   First  Fiscal   Year  ending   November  30,  1913: 

General  Government  ?  280,298.79 

Protection  to  person  and  property 81,768.96 

Development — Conservation  Nat.  Resources  92,047.58 

Highways    ' 160,983.29 

Charities,  Hospitals,  Corrections   219,272.66 

Education   384,159.51 

Principal  and  Interest  on  Public  Debt  533,944.72 

Permanent  Funds  2,978.55 

Miscellaneous : 53,327.61 


Total :. $1,808,799.67 

For  the   Second   Fiscal   Year  ending    November  30,   1914: 

General  Government  $     216,307.19 

Protection  to  person  and  property  74,932.10 

Development — Conservation  Nat.  Resources         90,486.95 

Highways    172,441.63 

Charities,   Hospitals,    Corrections 214,641.88 

Principal  and  Interest  on  Public  Debt 272,421.76 

Permanent  Funds  6,404.56 

Miscellaneous    31,486.37 

Education   463,471.31 


Total - $1,542,593.75 

F«r  the  Third  Fiscal  Year  ending  November  30,  1915: 

General   Government   $     358,766.35 

Protection  to  person  and  property  75,737.59 

Development — Conservation  Nat.  Resources       134,723.86 

Highways   6.'-)3, 457.75 

Charities,    Hospitals,    Corrections    213,654.27 

Education   651 ,479.54 

Principal  and  Intr^rest  on  Public  Debt  - 161,326.43 

Permanent  Fund  22,428.69 

Miscellaneous    ._ - -.- 39,829.64 


Total $2.31,1.404.12 


264  REPORT  OF  THE  NEW  MEXICO 

For  the  Fiscal  Year  ending  November  30,  1916: 

General  Government  $  240,629.20 

Protection  to  person  and  property  62,812.67 

Development — Conservation  Nat.  Resources  108,020.18 

Highways   ■ 162,011.90 

Charities,  Hospitals,  Corrections  229,087.79 

Education 844,387.28 

Principal  and  Interest  on  Public  Debt  398,631.42 

Permanent  Funds  154,332.69 

Miscellaneous  56,330.12 


Total $2,256,243.25 

For  the  Fifth  Fiscal  Year  ending  November  30,  1917: 

General  Government  $     400,310.55 

Protection  to  person  and  property  238,261.74 

Development — Conservation  Nat.  Resources       124,769.78 

Highways 189,272.92 

Charities,  Hospitals,  Corrections  308,522.71 

Education   966,970.59 

Principal  and  Interest  on  Public  Debt  223,600.32 

Permanent  Funds 457,914.03 

Miscellaneous    , 47,210.53 


Total $2,956,833.17 

For  the  Sixth  Fiscal  Year  ending  November  30,  1918: 

General  Government  $     288,433.35 

Protection  to  person  and  property 194,676.72 

Development — Conservation  Nat.  Resources       124,547.43 

Highways 588,533.70 

Charities,  Hospitals,   Corrections  261,651.30 

Education  1,366,769.33 

Principal  and  Interest  on  Public  Debt 215,044.97 

Permanent  Funds  459,796.00 

Miscellaneous 20,159.13 


Total $3,519,611.93 

For  the  Seventh  Fiscal  Year  ending  November  30,  1919: 

General  Government  $     400,655.11 

Protection  to  person  and  property 203,245.60 

Development — Conservation  Nat.  Resources      318,327.48 

Highways 1,095,558.32 

Charities,  Hospitals,  Corrections   327,199.62 

Education   1,424,956.10 

Principal  and  Interest  on  Public  Debt 499,786.77 

Permanent  Poinds 78,652.78 

Miscellaneous 

Total .: $4,348,381.78 


SPECIAL  REVENUE  COMMISSION 


265 


In  order  to  avoid  duplication  in  arriving  at  the  cost  of 
government,  there  should  be  deducted  the  payments  from  the 
current  school  fund,  because  such  payments  are  included  in 
the  expenditures  for  schools  in  the  analysis  of  county  pay- 
ments. Payments  for  state  educational  and  other  institutions 
should  also  be  deducted  as  such  payments  are  included  in  the 
analysis  of  expenditures  of  such  institutions.  Investments  of 
state  permanent  funds  are  also  deducted  because  such  payments 
are  not  in  the  nature  of  an  expenditure.  These  deductions  are 
represented  in  the  second  column  below. 


Year  end. 
Year  end. 
Year  end. 
Year  end. 
Year  end. 
Year  end. 
Year  end. 
Year  end. 
Year  end. 
Year  end. 


Nov. 
Nov. 

Nov. 
Nov. 
Nov. 
Nov. 
Nov. 
Nov. 
Nov. 
Nov. 


30,  1910 
30,  1911 
30,  1912 
30,  1913 
30,  1914 
30,  1915 
30,  1915 
30.  1917 
30,  1918 
30,  1919 


Total 
Payments 

$  901,794.10  $ 
935,355.71 
1,174,101.30 
1,808,799.67 
1,542,593.75 
2,311,404.12 
2,256,243.25 
2.956,333.17 
3.519.611.93 
4,348,381.78 


Less  Pay'ts  for 

Schools,  State 

Institutions 

and  Permanent 

Fund 

397,955.87 

403,213.16 

457,732.64 

575,830.29 

652,517.75 

854,142.95 

1.195,807.76 

1,701,407.33 

2,027,214.09 

1,797,631.28 


Balance  Re-    Annual 
presenting         per 
Other  Pay-    Centln- 
ments  crease 

f    503,838.23      

532,142.55 

716,368.66 
1,332,969.38 

890,076.00 
1,457,261.17 
1,060,435.49 
1,255.425.84 
1,492,397.84 
2,550.750.50 


5.5 
34.6 
86.1 
33.3* 
63.7 
27.2* 
18.4 
18.9 
70.9 


* — Indicates  decrease. 


266 


REPORT  OF  THE  NEW  MEXICO 


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268  REPORT  OF  THE  NEW  MEXICO 

APPENDIX  XVIII. 

COMPARATIVE  STATEMENT  OF  APPROPRIATIONS 

1912-1919. 

1912  1919  Increase  Decrs. 

N.  M.  College  of  Agri $  25,000.00  $117,990.56  $  92,990.56    $ 

University   of   N.   M 42,000.00  85,000.00  43,000.00       

N.  M.  School  of  Mines 22,5{I0.00  13,000.00     9,500 

N.    M.    Military   Institute 25,000.00  50,000.00  25,000.00       

N.  M.  Normal  University 30,000.00  55,000.00  25,000.00'      

N.  M.  Normal  School  28,000.00  53,000.00  25,000.00       

Spanish   American   Normal 8,000.00  11,250.00  3,250.00       

Deaf  and   Dumb  Asylum 10,000.00  22,000.00  12,000.00       

Blind  Asylum  10,000.00  34,500.00  24,500.00 

Miners   Hospital    10,000.00  7,500.00     2,500 

Insane    Asylum    60,000.00  85,000.00  25,000.00       

Reform    School    7,775.25  15,000.00  7,725.75       

Museum  of  New  Mexico 5,000.00  25,800.00  20,800.00       

N.   M.    Penitentiary   71,460.00  89,560.00  18,100.00       

Capitol  Bldg.  and  Mansion        12.760.00  15,500.00  2,740.00      

Child  Welfare   6,000.00  6,000.00       

Girls'  Welfare   8,000.00  8,000.00       

State  Board  of  Health 13,000.00  13,000.00 

Vocational   Education   20,688.68  20,688.68       

Historical    Society    1,200.00  1,200.00       

Predatory    Animals    25,000.00  25,000.00       


Total  $367,495.25  $753,989.24  $408,494.99  $12,000 

CHARITABLE    INSTITUTIONS. 

1912  1919 

Orphan  School Santa   Fe    $10,000  $10,000 

St.  Vincent's  Hospital Santa  Fe  3,600  3,600 

Grant  County  Hospital Silver  City  1,800  1,800 

Sisters  of  Mercy Silver  City  1,800  1,800 

Ladies'  Hospital  Deming  „.     1,800  1,800 

Eddy  County  Hospital  Carlsbad  1.800  1,800 

Sisters'  Hospital Albuquerque  2,400  2,400 

Ladies'  Relief  Society Albuquerque  3,000  3,000 

Gallup  Hospital Gallup   2,000  2,000 

St.  Mary's  Hospital  Roswell  1,800  1,800 

Sisters  of  Loretto. Mora  1,000  1,000 

Sisters  of  Loretto Las  Cruces  1,000  1,000 


Total $32,000     $32,000 


SPECIAL  REVENUE  COMMISSION 


269 


1912              1919          Increase  Decrs. 

Mounted  Police  $  12,000.00  ?  50,000.00  ?  38,000.00     $ 

Militia    Fund    10,700.00     10,700 

Interest  and  Deficiencies 91,240.00      91,285.76  45.76 

Total  $113,940.00  $141,285.76  $  38,045.76  $10,700 


SALARY    FUND. 


I 


1912 

Governor    $  12,600.00 

Secertary  of  State  6,250.00 

Auditor    6,300.00 

Treasurer   5,500.00 

Attorney  General   9,400.00 

Supt.    Public    Instruction 11,500.00 

Adjutant  General  4,200.00 

Traveling   Auditor   9,200.00 

Mine   Inspector  4,000.00 

State   Engineer  7,000.00 

Supreme   Court   24,600.00 

Supt.  of  Insurance 

Bank    Examiner    -       1,000.00 

Librarian    3,200.00 

Pension — Mrs.  De  Baca  - 

Legal   Adviser  

Water  Commisisoner  3,500.00 

Tax  Commission  1,900.00 

Grading    examination    papers     

Board  of  Ed.,  per  diem 

Insurance  of  Armories 

Printing  900.00 

Pub.   Const.   A 1,500.00 

District  Judges   36,000.00 

District   Attorneys 

Corporation   Commission   22,050.00 

Industrial    Director   1,600.00 

Students  and  Teachers   — - 

R.  R.  Fare  Normal  Students     

U.  S.  Land  Office  Fees 5,000.00 

Legislature  50,000.00 

Board   Loan   Commisioners T50.OO 

Experimental  Farm  3,500.00 

Indigent  Students  7,200.00 

Repairing  Old  Palace  5,000.00 


1919  Increase 

14,600.00  $     2,000.00 
7,200.00 


Decrs. 


6,900.00 
7,000.00 

12,400.00 

21,750.00 
6,000.00 

17,300.00 
4,800.00 

10,600.00 

28,500.00 
4.O00.00 

11,300.00 
3,700.00 
1,200.00 
2,000.00 
1,600.00 

40,000.00 
2,400.00 
1,000.00 
325.00 
1,350.00 
2,000.00 

40,500.00 
9,000.00 

22,300.00 

17,400.00 

12,000.00 

1,000.00 


950.00 

600.00 
1,500.00 
3,000.00 
10,250.00 
2,400.00 
8,100.00 

800.00 

3,600.00 

3,900.00 

4,000.00 

10,300.00 

500.00 
1,200.00 
2,000.00 

38,100.00 

2,400.00 

1,000.00 

325.00 

450.00 

500.00 

4,500.00 

9,000.00 

250.00 

17,400.00 
12,000.00 


1.900 


1,600 


4,000 

25,000.00 25.000 

750 

3.500 

7.200 

5,000 


Total  $243,650.00  $335,725.00  $141,025.00     $48,950 


270  REPORT  OF  THE  NEW  MEXICO 

RECAPITULATION. 

1912  1919 

State    Institutions        $367495.25  $    753,989.24 

Charitable   Institutions 32,000.00  32,000.00 

Mounted  Police,  etc 113,940.00  141,285.76 

Salary  Fund  and  Contingencies  243,650.00  335,725.00 


Total  $757,085.25  $1,263,000.00 

Levy *  12  mills  3^^  mills 

1/3     4  mills. 

* — Property  assessed  at  1/3  value.    If  assessment  at  full  value  the  rate 
would  have  to  be  four  millB. 


SPECIAL  REVENUE  COMMISSION 


271 


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APPENDIX  XXI. 
BONDED  STATE  AND  LOCAL  INDEBTEDNESS. 

Counties                      \County     Sch.  Dist.          City  Total 

Bernalillo  $    354,600  $1,156,200  $    853,000  $2,363,800 

Chaves  271,000        280,300        237,000  783,300 

Colfax    59,000        254,500        486,997  800,497 

Curry  59,000        297,000        348,000  704.000 

De  Baca  81,585          47,871  129,456 

Dona  Ana   210,100        169,900        115,000  495,000 

Eddy  72,500        122,047          95,000  289,547 

Hidalgo    53,000          96,000  149,000 

Grant   228,000          90,800        116,500  435,300 

Guadalupe  '66,000          25,000          15.000  106,000 

Lea   106,000          64,500  170,500 

Lincoln  150,000          53,00^  203,000 

Luna  10,000        196,880        258,000  464,880 

McKinley  86,000          38,885        240,000  364,885 

Mora  120,000        187,950          45,000  352,950 

Otero 45,000          98,186        300,000  443,186 

Quay  44,445        118,152        153,800  316,397 

Rio   Arriba    17,500  17.500 

Roosevelt  50,000          58,550        100,000  208,550 

Sandoval  38,700          10,000  48,700 

San  Juan  484,200          59,700          65.000  608,990 

San  Miguel  529,500          37,500          78,000  645,000 

Santa  Fe  55,000          56,000          31.700  142.700 

Sierra  164,000            6,000  170,000 

Socorro   49,500        183,200          30,000  262,700 

Taos   40,000         50,000  90.000 

Torrance   44,500       102,600  147,100 

Union  111,000        164,900        180,000  455,900 

Valencia    20,000         23,500 43,500 


Totals  $3,620,130  $4,049,211  $3,747,997  $11,417,338 


State  4,207,500 


Total  State  and  Local  --  $15,624,838 


SPECIAL  REVENUE  COMMISSION 


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SPECIAL  REVENUE  COMMISSION  283 

APPENDIX  XXIV. 

WHY  MORE  FUNDS  SHOULD  BE  MADE  AVAILABLE  BY 
NEW  MEXICO  TO  MEET  FEDERAL  AID. 

Estimated   Receipts: 

Delinquent  taxes   $      50,000.00 

Auto   licenses    1T5,000.00 

Taxes  1,518,396.87 


One  year  ...$1,743,390.87 

1920,  1921,  1922  , 1 $  5,230,190.61 

Debentures  sold  since  January  1,  1920  300,000.00 

On   hand    January   1,    1920    , _...       198,073.16 


Total  3  years $  5,728,263.77 

Estimated   Expenditures    (Other  than   Federal   Aid): 

Bernalillo-Farmington-AlbuQuerque  $  18,000 

Surveys  20,000 

Federal  equipment 25,000 

Overhead  75.000 

District  Offices  41,000 

Maintenance  Patrols 323,000 

1913  Highway  Bonds 60,000 

Emergency  Work  (includes  Forest  Aid) 204,000 


One  year $766,000 

1920,  1921,  1922  $  2,298,000.00 

Debentures   and   interest  877,611.35 


$3,175,611.35 


Receipts  3  years $  5,728,263.77 

Expenditures  3  years  (other  than  Federal  Aid) 3,175,611.35 


$  2.552,652.42 
Federal  Aid  met  by  expenditures  prior  to  Jan.  1,  1920  $     341,394.34 


Total  State  Fund  available  3  years  to  meet  Fed.  Aid  $  2,894,046.76 

Federal   Aid — New  Mexico: 

1919 $  1,273,633.77 

1920 1.517,692.99 

1921   1,598.467.85 


$  4,389,794.61 


284  REPORT  OF  THE  NEW  MEXICO 

Recapitulation: 

Total  Federal  Aid  $4,389,794.61 

State  Funds $2,894,046.76 

County  Funds  .'. 70,890.09—    2,964,936.85 

Federal  Funds  New  Mexico  unable  to  meet $  1,424,857.76 

The  foregoing  statement  is  an  estimate  by  the  State  High- 
way Commission.  It  is  believed  by  the  Special  Revenue  Com- 
mission that  the  gasoline  tax  will  yield  considerable  revenue 
and  that  the  receipts  from  delinquent  taxes  and  automobile 
licenses  are  underestimated.  Overhead  expenses  can  be  re- 
duced to  $65,000  annually  and  it  is  probable  that  emergenecy 
work  will  not  exceed  $180,000  a  year.  From  $350,000  to 
$400,00.  it  is  thought,  may  be  deducted  from  the  estimated 
needs. 


SPECIAL  REVENUE  COMMISSION  285 

APPENDIX  XXV. 

STATEMENT  OF  RECEIPTS  AND  EXPENDITURES 
STATE  HIGHWAY  COMMISSION 
For  the  Fiscal  Year  December  1,  1918  to  November  30,  1919, 
as  per  Request  New  Mexico  Special  Revenue  Commis- 
sion Letter  Dated  October  31,  1920. 

Balance  on  hand  December  1,  1918  $    122,089.52 

Receipts  as  follows: 

Bernalillo  $  23,349.56 

Chaves    17,009.75 

Colfax 25,815.00 

Curry 8,350.00 

De   Baca  7,670.17 

Dona  Ana  , 20,594.40 

Eddy 10,692.23 

Grant 29,203.09 

Guadalupe 11,939.32 

Hidalgo 

Lea    5,866.00 

Lincoln   43,076.47                  ■ 

Luna  14,794.5^ 

McKinley  , 957.50 

Mora   11,438.00 

Otero  4,018.23 

Quay   7,500.00 

Rio  Arriba  11,681.14 

Roosevelt  6,500.00 

Sandoval  2,295.39 

San   Juan   2,552.00 

San   Miguel 9,927.26 

Santa   Fe   15,720.48 

Sierra   6,968.32 

Socorro  , 4,116.76 

Taos  '. 14,315.37 

Torrance 4,181.70 

Union  8.700.00 

Valencia 1,245.68 

Federal    Government    39,739.21 

Auto    Licenses    62,671.39 

Taxes,  1  mill  and  delinquent  342,327.42 

Miscellaneous  9,251.54 

County    Forms    : 1 8-'j-54 

1913  Highway  bonds  12,386.50 

1919    Debentures    :. 500,000.00    $1,297,040.20 


$1,419,129.72 


286  REPORT  OF  THE  NEW  MEXICO 

Expenditures  as  follows: 

Construct.  Mainten. 

Bernalillo $  10,144.75  $        556.00     $      10,700.75 

Chaves   70,200.75  11,771.15  81,971.90 

Colfax  65,198.60  14,890.99  80,089.59 

Curry   1,130.38  19,995.38  21,125.76 

DeBaca  10,674.92  9,016.11  19,691.03 

Dona   Ana   47,706.67  17,900.87  65,607.54 

Eddy  9,156.95  18,630.78  27,787.73 

Grant   64,009.73  23,438.76  87,448.49 

Guadalupe  5,193.30  13,282.06  18,475.36 

Hidalgo  445.17  22.25  467.42 

Lea  7,441.59  59.45  7,501.04 

Lincoln  30,549.81  4,913.57  35,463.38 

Luna  30,833.03  30,833.03 

McKinley  4,773.37  4,773.37 

Mora  6,831.71  9,517.15  16,348.86 

Otero  8,979.89  2,844.58  11,824.47 

Quay   55,067.70  625.00  55,593.79 

Rio   Arriba   4,713.05  2,578.07  7,291.12 

Roosevelt  4,978.69  13,910.96  18,889.65 

Sandoval   •  13,404.49  550. 6T  13,955.16 

San  Juan  4,608.13  4,457.88  9,066.01 

San   Miguel  17,292.26  20,414.89  37,707.15 

Santa   Fe  58,876.09  3,784.22  62,760.31 

Sierra  14,297.87  3,792.94  18,090.81 

Socorro  13,474.66  5,154.32  18,628.98 

Taos 43,537.42  697.54  44,234.96 

Torrance   12,973.35  1,919.72  14,893.07 

Union   12,979.66  9,562.82  22,542.48 

Valencia  25,263.08  6,426.03  31,689.11 


$    650,063.79     $225,388.53     ?  875,452.32 

Farmington-Albuquerque-Bernalillo  Road  ?  279.30 

Highway    Commission    2,754.76 

Office  Expense  12,245.70 

Office   Engineering   8,322.29 

1913   Highway  Bonds  and  Interest 60,000.00 

Federal  Equipment  , 80,285.16 

General    E<iuipment    .; 31,808.36 

Travel   Expense  ' 4,025.06    $1,075,172.95 


Balance  on  hand  November  30th,  1919 $    343,956.77 


SPECIAL  REVENUE  COMMISSION  287 

STATEMENT 

For  Fiscal  Year  December  1,1919  to  November  30,  1920 

Except  Month  of  November,  1920. 

Balance  on  Hand  December  1,  1919 $      343,956.77 

Receipts  as  follows: 

County  Aid  3  Mill  Tax 

Bernalillo  $        2,480.40  $  55,260.80     $      57,741.20 

Chaves   25,450.00  53,966.53  79,416.53 

Colfax  3,178.64*  85,971.16  82,792.52 

Curry   698.71  30,417.32  31,116.03 

DeBaca  2,526.21  17,607.50  20,133.71 

Dona  Ana  19,342.40  49,943.33  69,285.73 

Eddy   6,200.00  27,605.43  33,805.43 

Grant   122,525.80          122,525.80 

Guadalupe  255.72  24,105.62  24,361.34 

Hidalgo 145.06                 145.06 

Lea   ._   3,375.00  19,171.23  22,546.23 

Lincoln  1,766.15  27,064.37  28,830.52 

Luna  5,000.00  37,006.07  42,006.07 

McKinley  29,979.24  29,979.24 

Mora  4,963.00  30,016.74  34,979.74 

Otero  27,045.61  27,045.61 

Quay  10,000.00  34,514.33  44,514.33 

Rio  Arriba  .     6,534.80  16,145.67  22.680.47 

Roosevelt  23,930.17  23,930.17 

Sandoval  2,310.00  11,375.39  13,685.39 

San  Juan 1,250.00  11,252.79  12,502.79 

San  Miguel  ...'. 6,000.00  49,449.63  55,449.63 

Santa  Fe  24,975.88  24,975.88 

Sierra  ...                              842.64  15,384.43  16,227.07 

Socorro 6,250.00  38,687.82  44,937.82 

Taos 1,090.00  12,417.14  13,507.14 

Torrance   5,543.90  27,802.72  33,346.62 

Union   2,722.12  44,527.18  47,249.30 

Valencia  18,969.79  40,406.23  59,376.02 


$    130,392.20     $988,701.19     $1,119,093.39 

Federal    Government    $  367,812.13 

Auto    Licenses    175,797.47 

Taxes,  1  mill  and  delinquent 530,626.89 

Miscellaneous 17.417.78 

County    Forms    5.00 

1913  Highviray  Bonds 1,937.11 

1919  Debentures  ., 300,000.00 

Farmington-Bernalillo-Albuquerque  Road  55,574.92 

General    Roads 2.645.26 

Federal    Trucks 33,000.00    $2,603,909.95 


Note:     *  should  be  shown  in  red.  $2,947,866.72 


288  REPORT  OF  THE  NEW   MEXICO 

Expenditures  as  follows. 

Construct.  Mainten. 

Bernalillo  $  145,691.60  $     9,209.27     $    154,900.87 

Chaves  129,083.76  16,817.04  145,900.80 

Colfax  232,407.22  26,937.19  259,344.41 

Curry  1,373.15  6,138.26  7,511.41 

DeBaca  1,353.46  4,467.54  5,821.00 

Dona  Ana  247.024.99  12,910.69  259,935.68 

Eddy  4,561.60  7,530.73  12,092.33 

Grant  34.410.30  13,737.62  48,147.92 

Guadalupe  3,426.68  21,231.04  24,657.72 

Hidalgo  756.19  5,655.02  6,411.21 

Lea  49,902.30  2,775.86  52,678.16 

Lincoln  124,160.47  8,325.37  132,485.84 

Luna 42,011.29  5,312.97  47,324.26 

McKinley  2,281.13  4,987.42  7,268.55 

Mora  23,073.62  10,374.93  33,448.55 

Otero  3,820.13  5,120.99  8,941.12 

Quay  127,536.80  6,011.21  133,548.01 

Rio  Arriba   10,520.89  6,173.43  16,694.32 

Roosevelt  2,137.18  3,996.35  6,133.53 

Sandoval   4.772.81  4,616.78  9,389.59 

San  Juan  2,156.43  886.47  3,042.90 

San  Miguel  15,814.05  15,823.45  31,637.50 

Santa  Fe  87,292.99  7,218.30  94,511.29 

Sierra  13,923.58  6,633.67  20,557.25 

Socorro  38,872.03  9,410.23  48,282:26 

Taos   6,211.73  3,246.01  9,457.74 

Torrance  16.647.63  6,610.99  23,258.62 

Union  2,066.33  7,881.96  9,948.29 

Valencia    77,315.52  20,890.48  98,206.00 


$1,450,605.86     $260,931.27     $1,711,537.13 

Farmington-Bernalillo-Albuquerque  Road       $  47,360.71 

Highway    Commission    1,989.85 

Office  Expense  13,307.40 

Office  Engineering  15,963.10 

1913  Highway  Bonds  and  Interest 38,000.00 

Federal  Equipment 36,117.07 

General  Equipment  22,821.59 

Travel  Expense  5,418.84 

District   Offices 37,155.02 

1919   Debentures  Int 28,023.10    $1,957,693.81 


Balance  on  hand  October  31.  1920 $    990,172.91 


SPECIAL  REVENUE  COMMISSION  289 

The  receipts  for  the  first  year  as  enumerated  opposite  the 
various  counties  are  moneys  supplied  by  these  individual  coun- 
ties from  their  county  funds  for  State  Aid  road  construction 
and  maintenance  and  are  not  taxes  collected  under  the  ly^  or 
3  mill  road  levies.  The  same  kind,  of  receipts  are  shown  in 
second  year  as  "County  Aid". 

The  division  of  expenditures  as  to  construction  and  main- 
tenance is  made  in  accordance  with  request.  However,  it 
should  be  borne  in"  mind  that  it  is  a  very  hard  matter  to  dis- 
criminate between  betterments  and  construction  or  to  know 
just  where  the  line  should  be  drawn  between  these  items.  It 
may  be  possible  that  we  have  included  under  the  construction 
items  more  road  work  which  should  have  been  noted  as  main- 
tenance. 

The  balance  on  October  31st,  1920,  includes: 

State  Road  Fund $982,238.00 

Farmington-Bernalillo-Albuquerque  7,934.91 


290  REPORT  OF  THE  NEW  MEXICO 

APPENDIX  XXVI. 

SOME  COMPARISONS  AS  TO  ASSESSED  VALUATIONS 

IN  NEW  MEXICO. 

1915  1916  1917 

Tax  Roll  $307,727,417     $312,644,252     $339,759,197 

Per  Cent  Increase 1.6 8.7 

Per  Cent  Decrease 

Mine  Output 10,419,703        17,248,630        17,662,492 

Per  Cent  Increase 65.5 2.4 

Per  Cent  Decrease 

Private  Car  Co.s _..  1,439,517 

Per  Cent  Increase 

Per  Cent  Decrease 

Total  Valuation $318,147,120     $329,892,882     $358,861,206 

Per  Cent  Increase 

Per  Cent  Decrease 3.7 8.8 

Property   assessed   by 

counties  $210,227,897     $209,199,702     $234,350,955 

Per  Cent  Increase ; 12.2 

Per  Cent  Decrease 0.5 

Corporations  assessed 

by  Tax  Commission  107,919,223       120,693,180       124,510,251 

Per  Cent  Increase 11.9 3.1 

Per  Cent  Decrease 

Railroads  95,995,400         96,233,943         97,488,371 

Per  Cent  Increase 2.5 1.3 

Per  Cent  Decrease 

Tel.  and  Tel 1,504,120  1,531,892  1,538,794 

Per  Cent  Increase 1.2 0.4 

Per  Cent  Decrease 

Banks  5,378,980  5,678,715  6,381,077 

Per  Cent  Increase 5.6 12.4 

Per  Cent  Decrease 


SPECIAL  REVENUE  COMMISSION  291 

1918       1919       1920 

Tax  Roll  $359,615,177     $360,369,084     $ 

Per  Cent  Increase 5.8 0.2...- 

Per  Cent  Decrease " 


Mine  Output 13.279,164         15.382,545     $ 

Per  Cent  Increase _ 15.8 

Per  Cent  Decrease 24.8 


Private  Car  Co.s  2,315,540  1,515,089     $.. 

Per  Cent  Increase 60.8 _ 

Per  Cent  Decrease 34.6 


Total  Valuation  $375,209,881     $377,266,718     $.. 

Per  Cent  Decrease 

Per  Cent  Decrease 4.5 0.5 


Property    assessed   by 

counties  $251,515,961     .$251,419,016     $.. 

Per  Cent  Increase 7.3 

Per  Cent  Decrease 


Corporations  assessed 

by  Tax  Commission  123,693,920       125.847,702     $ .■......„. 

Per  Cent  Increase 1.7 

Per  Cent  Decrease 0.7 _ 

Railroads  98,617,734         98,334,357       101,319.796 

Per  Cent  Increase 1.2 3.1 

Per  Cent  Decrease 0.3 

Tel.  and  Tel 1,792,293  1,900,212  2,171.895 

Per  Cent  Increase 16.4 6.1 _ 14.3 

Per  Cent  Decrease 

Banks  7,689.189  8.715.499  9.220,501 

Per  Cent  Increase 20.5 13.5 5.8 

Per  Cent  Decrease 


292 


REPORT  OF  THE  NEW  MEXICO 


APPENDIX  XXVII. 


COUNTY  VALUATIONS  BY  YEARS 

(Not  including  value  of  net  output.) 

1915  1916 

Bernalillo $  18,298,352  $  18,351,854 

Chaves  21,632,250  23,762,930 

Colfax  24,375,340  24,679,031 

Curry  ! 9,043,515  9,287,860 

DeBaea  

Dona  Ana  22,664,518  18,172,296 

Eddy  11,665,515  11,261,507 

Grant 23,240,295  24,517,549 

Guadalupe  12,487,796  13,120,852 

Lea  

Lincoln  8,003,221  8,310,957 

Luna 11,411,030  11,458,263 

McKinley  9,854,808  9,381,853 

Mora  8,029,860  9,092,470 

Otero 9,286,601  9,110,295 

Quay  9,993,800  10,535,199 

Rio  Arriba  6,190,240  6,191,010 

Roosevelt  8,575,033  8,195,312 

Sandoval  4,927,022  4,960,686 

San  Juna 4,782,625  4,214,870 

San  Miguel  17,807,911  19,616,834 

Santa  Pe  9,528,087  9,545,131 

Sierra  5,450,653  5,816,804 

Socorro 14,361,269  14,391,614 

Taos  3,963,711  4,295,263 

Torrance  8,058,763  8,508,839 

Union  11,012,078  11,471,884 

Valencia  '. 15,186,700  14,393,089 

$307,727,417  $312,644,252 


1917 

$  20,910,143 

19,787,570 

25,367,379 

9,950,410 

6,120,823 

18,634,357 

8,758,465 

27,557,141 

10,956,800 

6,375,655 

9,289,176 

12,467,472 

10,398,618 

9,713,346 

9,560,322 

12,307,524 

7,741,224 

8,863,478 

5,084,004 

4,383,984 

21,040,390 

10,302,349 

5,933,281 

15,781,739 

4,893,783 

9,037,750 

13,071,236 

15,470,778 

$339,759,197 


SPECIAL  REVENUE  COMMISSION  293 

COUNTY  VALUATIONS  BY  YEARS. 

(Continued.) 

1918  1919 

Bernalillo $  20,959,769     $  20,976,234 

Chaves 20,955,070  19,493,115 

Colfax  26,370,292  27,424,453 

Curry  _ 10,516,470  10,667,085 

DeBaca  6,993,841  6,235,804 

Dona  Ana  18,493,102  17,859,218 

Eddy  - - 9,867,990  10,280,915 

Grant  29,489,430  30,518,007 

Guadalupe   11,025,435  10,063,527 

Lea  7,023,425  6,778,870 

Lincoln 10,173,525  9,758,029 

Luna  12,852,530  13,517,561 

McKinley  10,823,180  10,474,438 

Mora  .' 10,064,933  11,066,969 

Otero 10,615,402  10,845,862 

Quay - - 13,077,136  12,853,372 

Rio  Arriba  8,003,267  7,321,588 

Roosevelt  9,213,531  8,407,448 

Sandoval  - 5,979,664  5,265,208 

San  Juan  .:. _ 4,468,339  4,504,605 

San  Miguel  21,211,832  21,070,335 

Santa  Fe 10,872,929  11,184,826 

Sierra 5,814,615  5,938,562 

Socorro 18,387,973  18,481,432 

Taos                             5,136,835  5,485,141 

Torrance  - 10,111,170  9,996,593 

Union  _ 16,018,961  17,316,560 

Valencia...- -.._ - 15,094,516  16,583.327 

$359,615,177     $360,369,084 


294                              REPORT  OF  THE  NEW  MEXICO 

APPENDIX  XXVIII. 
COMPARATIVE  STATEMENT  OF  ASSESSED  VALUATION 

(Including  Net  Value  of  Output  of  Mines.) 

County                                          19lS  1919           Increase     Decrease 

Bernalillo  $  2&,959,769  $  20,976,234  |        16,465  $ 

Chaves  20,955,070       19,493,115  1,461,955 

Colfax  29,710,087       29,901,647  191,560  

Curry  _. 10,516,470       10,667,085  150,615  

De  Baca  6,993,841         6,235,804  758,037 

Dona   Ana   18,493,102       17,859,360  633,742 

Eddy  9,867,990       10,280,915  412.925  

Grant  38,788,876       42,494,214       3,705,338  

Guadalupe    11,025,435       10,063,527  961,908 

Hidalgo  318,568  318,568  

Lea  7,023,425         6,778,870  244,555 

Lincoln  10,173,535         9,758,029 415,506 

Luna  12,852,530       13.517,561  665,031  

McKinley  11,131,915       10,713,203  418.712 

Mora  10,064,933       11,066,969       1,002,036  

Otero  10,635,039       10,845,862  210,823  

Quay  13,077,136       12,853,372 223.764 

Rio   Arriba   8,008,593         7,321,598 686,995 

Roosevelt  9,213,531         8,407,448  806,083 

Sandoval    5,979,664         5,265,208  714,456 

San  Juan  4,470,288         4,505,347  35.059  

San  Miguel 21,211,832       21,070,335  141.497 

Santa  Fe  10,945,341       11,296,525  351,184  

Sierra  5,814,615         5,942,530  127,915  

Socorro   18,616,609       18,767,682  151,073  

Taos 5,136,835         5,485,141  348,306  

Torrance   10,114,403         9,965,593  , 148,810 

Union  , 16,018,961       17,316,560       1,297,599  

Valencia   15,094,516       16,583,327       1,488,811  


Total    Counties    $372,894,341  $375,751,629  $10,473,308  $7,616,020 

Private  Car  Co's 2,315,540         1,515,089  800.451 


Total  Incr.  or  Deer $10,473,308  $8,416,471 

Total   for  State $375,209,881  $377,266,718  


Not   Increase $2,056,837 


SPECIAL  REVENUE  COMMISSION  295 

APPENDIX  XXIX. 

TABLE  SHOWING  GROSS  ASSESSED  VALUE,  EXEMPT- 
TIONS  AND  NET  ASSESSED  VALUE  OF  ALL 
COUNTIES    IN    NEW    MEXICO 
FOR  THE  YEAR  1919. 

Name  of  Counties                                          Gross          Exempt.  Net 

Bernalillo    $  21,674,304  $    698.070  $  20,976,234 

Ciiaves   ,...     19,794,135        301,020  19,493,115 

Colfax  30,247,622        345,975  29,901,647 

Curry 11,015,935        248,850  10,667,085 

De  Baca 6,342,012        106,208  6,235,804 

Dona  Ana   18,118,939        359,579  17,859,360 

Eddy  10,428,495        147,580  10,280,915 

Grant   42,751,154        256,910  42,494,214 

Guadalupe   10,221,921        158,394  10,063,527 

Hidalgo  (mine  output) 318,568  .". 318,568 

Lea  6,943,588        164,718  6.778,870 

Lincoln 9,874,164        116,135  9,758,029 

Luna  , 13,669,251        151,690  13.517,561 

McKinley    10,827,403        114,200  10,713,203 

Mora 11,491.570        424,601  11,066,969 

Otero 11,100,323        254,461  10,845,462 

Quay  13,192,772        339,400  12,853,372 

Rio   Arriba   7,587.496        265,898  7,321,598 

Roosevelt  8,681,949        274,501  8,407,448 

Sandoval  5,452,493        187,285  5,265,208 

San    Juan 4,732,494        227,147  4,505,347 

Santa  Fe  _ 11,799,775        503,250  11,296.525 

San  Miguel  ., 21,524,887        454,552  21,070,335 

Sierra 6,130,734        188,204  5,942,530 

Socorro  19,024,282        256,600  18,767,682 

Taos    ., 5,809,141        324,000  5,485,141 

Torrance   10,252,806        287,213  9,965.593 

Union   17,770,686        454,126  17,316.560 

Valencia  16,813,121        229,794  16.583,327 


Total  all  counties $383,592,020  $7,840,391  $375,751,629 

Private  Car,   (not  distributed) 1,515.089     1.515.089 


Grand  Total  $385,107,109  $7,840,391  $377,266,718 


296  REPORT  OF  THE  NEW  MEXICO 

APPENDIX  XXX. 

VALUATION  OF  PROPERTY  SUBJECT  TO  TAX 

State  Tax  Rate  and  Its  Production. 

1910 $  58,313,126 

1911 60,048,881 

1912 72,457,454 

1913 84,086,518 

1914 89,203,939 

1915 318,147,120 

1916 329,892,882 

1917 358,861,206 

1918 375,209,881 

1919 377,266,718 

Note : — It  should  be  kept  in  mind  that  prior  to  1915  assess- 
ment was  at  one-third  full  value  .  This  was  true  of  1913  and 
1914  by  law  and  for  previous  years  apparently  by  common 
consent.  For  comparative  purposes  therefore,  we  must  multi- 
ply assessment  for  1912  by  three  and  take  one-third  of  tax 
rate  for  the  same  year  and  we  reach  the  conclusion  that  the 
property  subject  to  tax  has  increased  from  $217,372,362  in 
1912  to  $377,266,718  in  1919,  or  74  per  cent ;  the  state  tax  rate 
has  increased  in  the  same  period  from  .0045  to  .00575  or  28 
per  cent ;  and  the  product  of  the  state  tax  has  increased  from 
$978,175.63  in  1912  to  $2,173,010.39  or  122  per  cent.  If  the 
three  mill  road  tax  be  counted  as  a  state  tax,  the  rate  would 
show  an  increase  of  95  per  cent  and  the  product  an  increase 
of  238  per  cent.  This  table  has  no  reference  to  other  than 
the  state  tax  rate  and  its  production  on  the  basis  of  100  per 
cent  collection. 


.0135 

.0136 

.0116 

.00395 

.00365 

.00540 

.00525 

.00575 

$  978,175.63 
1,143,576.64 
1,034,765.69 
1,256,681.12 
1,204,109.02 
1,937,850.51 
1,969,831.87 
2,169,283.63 

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298 


REPORT  OF  THE  NEW  MEXICO 


APPENDIX  XXXII. 


STATE  AND  COUNTY  TAX  LEVIES 
GENERAL  PROPERTY. 


(From  Assessors'  Tax  Rolls.) 


Counties  Levy 

Bernalillo  - 01483 

Chaves    - 01180 

Colfax  - 01015 

Curry    .. 011875 

De  Baca  

Dona  Ana 01035 

Eddy   _   01560 

Grant  00930 

Guadalupe   01114 

Lea , 

Lincoln   ...  _ 01150 

Luna    01085 

McKinley  00822 

Mora  -.. 01170 

Otero  ..  - 01320 

Quay   012768 

Rio  Arriba  01220 

Roosevelt  01140 

Sandoval 01278 

San   Juan   01483 

San    Miguel 01185 

Santa  Fe  01470 

Sierra  011864 

Socorro  ..  - 01312 

Taos - 012375 

Torrance  01059 

Union  ._  _ 012T5 

Valencia  010618 

Totals  ...  _ ..-„ 

%  Increase  ._ 

%  Increase 


1915 


191^ 


Amount 

Levy 

Amount 

?  271,281.68 

.01376 

%    252,365.57 

255,263.04 

.01135 

261,434.14 

247,409.53 

.00917 

226,306.77 

107,391.70 

.01017 
.01040 

94,55r.52 

193,821.27 

188,993.01 

181,980.14 

.01435 

161,519.43 

216,144.73 

.00818 

200,553.63 

139,114.04 

.01124 

147,481.01 

92,043,50 

.01338 

111,298.18 

123,809.96 

.01122 

128,562.04 

81,011.39 

.00858 

80,520.27 

93,949.80 

.01130 

103,151.86 

122,583.12 

.01330 

121,161.90 

127,601.94 

.01302 

137,256.77 

75,520.97 

.01235 

70,267.96 

97,763.34 

.01280 

104,899.99 

61,765.65 

.009125 

45,266.25 

70,942.63 

.01488 

62,834.30 

211,058.25 

.01100 

215,820.76 

140,149.93 

.01470 

140,314.35 

64,666.58 

.01107 

64,392.11 

188,419.84 

.01199 

172,555.41 

49,050.78 

.0122885 

52,757.74 

85,342.30 

.01015 

86,364.72 

140,403.98 

.01263 

144,938.77 

161.292.50 

.01053 

151.559.23 

13.598,882.68 

$3,527,233.69 

2.0 - 

SPECIAL  REVENUE  COMMISSION 


299 


1917 


1918 


Counties  Levy 

Bernalillo  01600 

Chaves  01300 

Colfax   01420 

Curry    ._    01675 

De   Baca  01948 

Dona    Ana 01490 

Eddy   01715 

Grant  01060 

Guadalupe 01720 

Lea  „ 01750 

Lincoln  ..  01530 

Luna  01460 

McKinley   01080 

Mora   01351 

Otero  01446 

Quay 01674 

Rio  Arriba  01715 

Roosevelt  01590 

Sandoval  01480 

San  Juan .01840 

San   Miguel    015405 

Santa  Fe   01905 

Sierra   ._   01390 

Socorro  01617 

Taos    ._ 01774 

Torrance    01457 

Union  ._  „ 01648 

Valencia  01216 

Totals  

%  Increase  .„  _ 

%  Decrease. 


Amount 

Levy 

Amoiint 

$  340,528.97 

.01750 

%    366.694.94 

277,025.99 

.01462 

306,365.44 

360,216.73 

.01368 

360,745.60 

166,669.36 

.01601 

113,157.20 

119,233.63 

.01715 

119,944.38 

277,653.57 

.01578 

291,819.84 

150,205.95 

.01715 

169,228.65 

292,105.69 

.01191 

196.399.61 

188,366.10 

.01700 

187.431.79 

111,573.96 

.01763 

123,822.99 

142,124.41 

.01582 

160,945.41 

182,023.51 

.01617 

20T.825.37 

112,305.40 

.01172 

126,844.55 

131,227.25 

.01383 

139,197.99 

138,452.93 

.01563 

165,918.99 

206,027.96 

.01651 

125,903.u2 

132,761.98 

.01742 

139,416.91 

140,861.14 

.01593 

146,771.52 

75,243.26 

.01360 

81,323.44 

78,274.95 

.01965 

87,802.86 

324,136.39 

.01560 

330,919.18 

196,413.53 

.01893 

205,824.54 

82,472.60 

.01452 

.84,428.13 

255,190.71 

.01500 

275,819.60 

86,815.71 

.01725 

88,610.40 

131,680.00 

.01370 

138,523.03 

215,413.96 

.01484 

237,721.38 

188,124.57 

.01201 

181,285.13 

$5,103,130.21 

15.250.692.39 

44.6 

3.0 

300  REPORT  OF  THE  NEW  MEXICO 

STATE  AND  COUNTY  TAX  LEVIES. 
GENERAL  PROPERTY  (Continued). 

1919 

Counties—                                                                     Levy  Amount 

Bernalillo    02515  $527,553.91 

Chaves  02100  409,370.73 

Colfax          ' 01895  519.693.39 

Curry   2585  275,744.12 

De   Baca  022415  159,775.53 

Dona  Ana  III 02200  392,902.81 

Eddy   02220  228.236.25 

Grant            01784  544.441.24 

Guadalupe  1 01999  201.169.91 

Lea  „ 02528  171,369.82 

Lincoln    02224  216,992.63 

Luna              • 01961  265,179.36 

McKinleyll 01995  207,576.27 

Mora   .- 02010  220.446.02 

Otero    r......... 02464  267,241.83 

Quay                02595  333,544.99 

Rio  Arriba  1.' 024225  177.365.49 

Roosevelt    02315  194,633.67 

Sandoval  01775  93,457.42 

San  Juan  03005  135,363.36 

San  Miguel  02325  489,899.05 

Santa  Fe  02300  257,251.00 

Sierra  01667  98.988.76 

Socorro   02125  392,730.45 

Taos         02175  119.301.82 

Torrance  IIZIIJ : ,- 02521  251.232.60 

Union          02125  367,976.90 

Valencia I'lII'1 01774  294,188.27 


Totals    $7,813,627.60 

Per  cent  increase,  49.0. 


SPECIAL,  REVENUE  COMMISSION 


301 


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307 


APPENDIX  XXXVI. 


TOTAL  ASSESSMENT  OF  THE  PROPERTY  OF  CERTAIN 
LEADING  MINING  COMPANIES. 


1914 


Output 


Other 

Mining 

Property 


All 

Mining 

Property 


Grant  County: 

Chino  Copper  Co 108,557  3,798,929  3,907.486 • 

85  Mining  Co 930  19,800  20,730 

Empire  Zinc  Co 7,620  4,450  12,070 

Phelps  Dodge  Corp. 73,577  117,483  191,060 

Total  County 190,684  3,940,662  4,131,346 

Socorro  County: 

Ozark  S.  &  R.  Co 7,790  114,024  121,814 

Empire  Zinc  Co 20,315  31,159  51,474 

Mogollon  Mines  Co 4,800  1,200  6,000 

Socorro  M.  &  M.  Co 10,796  261,343  272,139 

Total   Precious   Mineral  234,385  4,348,388  4,582,773 

Carthage  Fuel  Co 10,800  9,120  19,920 

Total  County 54,501  416,846  471,347 

McKinley  County: 

Diamond  Coal  Co 35,200  48,294  83,494 

Gallup  S.  W.  Coal  Co 4,500  1.110  5,610 

Gallup  Amer.  Coal  Co.  (Victor) 118,800  189,285  308,085 

Total  County 158,500  238,689  397,189 

Colfax  County: 

St.  Louis  R.  M.  &  Pac.  Co 690,247  1,241,480  1.931,727 

Stag  Canon  Fuel  Co 383,333  1,109,196  1,492.529 

Total  County 1.073,580  2,350,676  3.424,256 

Total  Coal  1.242.880    $  2.598.485    $  3,841,365 

GR;\ND  TOTAL 1,477.265  fi,946,873  8.424,138 


308                             REPORT  OF  THE  NEW  MEXICO 

1915 

Other  All 

Output  Mining  Mining 

Property  Property 

Grant  County: 

Chino  Copper  Co 6,846,204  $  4,518,590  ?11,364,794 

85  Mining  Co 183,689  45.970  229,659 

Empire  Zinc  Co 358,233  44,050  402,283 

Phelps  Dodge  Corp 17.152  291,000  308.152 

Total  County 7,405,278  4,899,610  12.304,888 

Socorro  County: 

Ozark  S.  &  R.  Co - 575.872  72,780  648,652 

Empire  Zinc  Co , 99.660  42,050  141,710 

Mogollon  Mines  Co 130,485  200,000  330.485 

Socorro  M.  &  M.  Co 180,154  200.000  380.154 

Total  Precious   Mineral  8,391.449  5.414.440  13,805,889 

Carthage  Fuel  Co 8,387  18,250  26,637 

Total  County 994,558  533,080  1,527,638 

McKinley   County: 

Diamond  Coal  Co 65,962  53,650  119.612 

Gallup  S.  W.  Coal  Co 27.978  3,850  31,828 

Gallup  Amer.  Coal  Co.  (Victor) 89,978  177.977  267.955 

Total  County 183,918  235.477  419.395 

Colfax  County: 

St.  Louis  R.  M.  &  Pac.  Co 721,950  2,121,052  2,843,002 

Stag  Canon  Fuel  Co 425.780  1.547.972  1.973.752 

Total  County 147,730  3,669,024  4,816,754 

Total  Coal 1,340.035  3,922,751  5,262,786 

GRAND  TOTAL 9,731,484  9,337,191  19,068,675 


I 


SPECIAL  REVENUE  COMMISSION  309 

1916 

other  All 

Output          Mining  Mining 

Property  Property 
Grant  County: 

Chino  Copper  Co 12,600,293    $  4,953,690  $17,553,983 

85  Mining  Co 566,613            55,100  621.713 

Empire  Zinc  Co 471,602           216,830  588.432 

Phelps  Dodge  Corp 639,056           670,960  1,310.016 

Total  County 14.277.564        5,896,580  20,174,144 


Socorro  County: 

Ozark  S.  &  R.  Co 279,979  87,723  367,702 

Empire  Zinc  Co 218,691  42,726  261.417 

Mogollon  Mines  Co 70.009  150.000  220,009 

Socorro  M.  &  M.  Co 183,725  166,281  350,006 

Total  Precious  Mineral  15,029,968  6,343,310  21,373,278 

Carthage  Fuel  Co 7,726  18,023  25,749 

Total  County 760,130  464,753  1,224,883 


McKinley  County: 

Diamond  Coal  Co 53,698  56,742  110.430 

Gallup  S.  W.  Coal  Co _ 18,338  4,162  22,500 

Gallup  Amer.  Coal  Co.  (Victor) 53,538  176,213  229,751 

Total  County 125,574  237.117  362.681 


Colfax  County: 

St.  Louis  R.  M.  &  Pac.  Co 734,035  2.161,226  2.895,261 

Stag  Canon  Fuel  Co 410,918  1,591,365  1,992,283 

Total  County 1,144,953  3,742,591  4.887,544 

Total  Coal  1.278,253  3,997,731  -  5,275,974 

GRAND  TOTAL 16,308,221  $10,341,041  $26,649,252 


I 


310  REPORT  OF  THE  NEW  MEXICO 

1917 

Other  All 

Output           Mining  Mining 

Property  Property 
Grant  County: 

Chino  Copper  Co 11,337,224    $  5,734,744  |17,071,964 

85  Mining  Co 341,725             72,420  414,145 

Empire  Zinc  Co 252,267           279,670  531,937 

Phelps  Dodge  Corp 1,637,223        1,304,840  2,942.063 

Total  County 13,568,439        7,391,674  20,960,113 


Socorro  County: 

Ozark  S.  &  R.  Co 287,165  28,087  315.252 

Empire  Zinc  Co 151,809  42,835  194,644 

Mogollon  Mines  Co 71,185  150,030  221,215 

Socorro  M.  &  M.  Co 50.181  169,790  219,971 

Total  Precious   Mineral  14,128,779  7,782,416  21,913',195 

Carthage  Fuel  Co 22,405  26,945  49,350 

Total  County 582.745  417,687  1,000,432 


McKinley   County: 

Diamond  Coal  Co 85,473  60,042  145,515 

Gallup  S.  W.  Coal  Co 25,432  4,306  29,738 

Gallup  Amer.  Coal  Co.  (Victor) 172,757  172,757 

Total  County 110,905  237,105  348,010 


Colfax  County: 

St.  Louis  R.  M.  &  Pac.  Co 1,426,085  2,200,617  3,626,702 

Stag  Canon  Fuel  Co 914,245  1,638,432  2,552,677 

Total  County  „ 2,340.330  3,839.049  6.179.379 

Total  Coal 2,473,640  *   4,103,099  6.576,739 


GRAND  TOTAL 16,602,419    $11,885,515    $28,487,934 


SPECIAL  REVENUE  COMMISSION  311 

1918 

other  All 

Output  Mining  Mining 

Property  Properly 
Grant  County: 

Chino  Copper  Co 7,383,905  $  7,032,329  $14,416,234 

85  Mining  Co.  ...- 16,751  101,090  117,841 

Empire  Zinc  Co 196,603  279,070  475,673 

Phelps  Dodge  Corp 1,386,584  1,530,470  2,917,054 

Total  County 8.983,843  8,942,959  17,926,802 

Socorro  County: 

Ozark  S.  &  R.  Co.. 139,980  113,807  253,787 

Empire  Zinc  Co 38,020  38,020 

Mogollon  Mines  Co 151,000  151,000 

Socorro  M.  &  M.  Co 164,460  164,460 

Total  Precious  Mineral  9,123,823  9,140,246  18,534,0B9 

Carthage  Fuel  Co 27,737  27,935  55,672 

Total  County 167,717  495,222  662,939 

McKinley   County: 

Diamond  Coal  Co 156,009  71,953  227,962 

Gallup  S.  W.  Coal  Co „ 65,435  3,850  69,285 

Gallup  Amer.  Coal  Co.  (Victor) 118,470  416,412  534,882 

Total  County 339,914  492,215  832,129 

Colfax  County: 

St.  Louis  R.  M.  &  Pac.  Co 1,810,465  2,370,904  4,181.369 

Stag  Canon  Fuel  Co 1,391,923  1,762,081  3,154,004 

Total  County  _ 3,202,388  4.132.985  7.335,373 

Total  Coal „ 3,570,039  4,6.53,135  8,223,174 

GRAND  TOTAL 12,693,862  $14,063,381  $26,757,243 


312  REPORT  OF  THE  NEW  MEXICO 

1919 

other  All 

Output           Mining  Mining 

Property  Property 

Grant  County:  „„,  ^,  , 

Chino  Copper  Co 10,440,474    $  7,885,140  $18,325,614 

85  Mining  Co             308,363           194.470  502,833 

Empire  Zinc  Co 250,767           309,120  559,887 

Plielps  Dodge  Corp 1,220,955        1,705,790  2,926,745 

Total  County 12,220,559      10,094,520  22,315,079 


^°0zarkl°7'R    Co 40.734  98,280  139,014 

Empire  Zinc  Co 3,892  32,735  36,627 

Mogollon  Mines  Co 68,096  164,075  232,171 

Socorro  M.  &  M.  Co 66,767  179,765  246.532 

Total  Precious   Mineral  12,400,048  10,569.375  22,969,423 

"    Carthage  Fuel  Co 16,722  23,535  40.257 

Total  County 196.211  498.390  694.601 


McKinley  County:  „„ 

Diamond  Coal  Co 167,118  155,015  322.133 

Gallup  S.  W.  Coal  Co '  31.217  3,850  35.067 

Gallup  Amer.  Coal  Co.  (Victor) 252.302  495,175  747,477 

Total  County 450,637  654.040  1,104.677 


Colfax  County: 

St    Louis  R.  M.  &  Pac.  Co 1,323,531  2,580,359  3.903,890 

Stag  Canon  Fuel  Co 928,672  1.820,373  2,749,045 

Total  County 2,252,203  4.400.732  6,652,935 

Total  Coal  2,719,562  5,078,307  7,797.869 

GRAND  TOTAL 15,119,610  $15,647,682  $30,767,292 


i 


SPECIAL  REVENUE  COMMISSION  313 

AVERAGE  1915-1919  Incl. 

Other  All 

Output          Mining  Mining 

Property  Property 
Grant  County: 

Chino  Copper  Co 9,721,620    $  5,923,082  $15,644,702 

85  Mining  Co 283,428             93,810  377,238 

Empire  Zinc  Co 305,894           225,758  531,652 

Phelps  Dodge  Corp 989,194        1,100,612  2,080,806 


Total  County 11,291,136        7,445,068      18,736,204 


Socorro  County: 

Ozark  S.  &  R.  Co 264,746  80,135  344,881 

Empire  Zinc  Co 94,800  39,673  135,473 

Mogollon  Mines  Co 67,955  163,021  230,976 

Socorro  M.  &  M.  Co 96,165  176,059  272,224 


Total  Precious   Mineral  11,814,802        7,903.957      19,718.759 


Carthage  Fuel  Co. 16,595  22,937  39,532 

Total  County 540,261  481,826        1,022,087 


McKinley  County: 

Diamond  Coal  Co 105,652  79,556  185,208 

Gallup  S.  W.  Coal  Co 33,680  4,003  37.683 

Gallup  Amer.  Coal  Co.  (Victor) 102,857  287,706  390,563 

Total  County 242,189  371,190  613,379 


Colfax  County: 

St.  Louis  R.  M.  &  Pac.  Co 1,203,213  2,286,831  3,490,044 

Stag  Canon  Fuel  Co 814,307  1,670,044  2,484,352 

Total  County 2,017.520  3,956,876  5,974.306 

Total  Coal  2.276.304  4.351,003  6,627.307 

GRAND  TOTAL 14,091,106  $12,254,960  $26,346,066 


314  REPORT  OF  THE  NEW  MEXICO 

INCREASE  1914-1915 

other  All 

Output          Mining  Mining 

Property  Property 

Grant  County:  ^   „  ,,„„„„ 

Chino  Copper  Co 6.737,647    $      719,661  $  7.457.308 

85  Mining  Co 182.759             26.170  208.929 

Empire  Zinc  Co 350,613             39,600  390.213 

Phelps  Dodge  Corp Dec.  56.425           173.517  117,092 

Total  County -       7.214,594           958.948  8.173,542 


Socorro  County:  ^„« „„„ 

Ozark  S.  &  R.  Co 568,082  Dec.  41,244  526.838 

Empire  Zinc  Co 79.345  10,891  90.236 

Mogollon  Mines  Co 125.685  198.800  324.485 

Socorro  M.  &  M.  Co 169,358  Dec.  61,343  108,015 

Total  Precious  Mineral  8.157.064  1.066,050  9.218.288 

Carthage  Fuel  Co Dec.    2,413  9.130  6.717 

Total  County 940,057  116.232  1.056.289 


McKinley  County: 

Diamond  Coal  Co '. 30,762  5,356  36,118 

Gallup  S.  W.  Coal  Co 23,478  2,940  26,418 

Gallup  Amer.  Coal  Co.  (Victor) Dec.  28.822  Dec.  11,308  Dec.  40,130 

Total  County 25,418  Dec.    3,212  22,206 


Colfax  County: 

St.  Louis  R.  M.  &  Pac.  Co 31,703  879.572  911,275 

Stag  Canon  Fuel  Co 42.447  438,776  481,223 

Total  County 74,150  1,318.848  1.392,998 

Total  Coal 97.155  1,324.766  1,426.747 

GRAND  TOTAL 8,254,219  $2,390,816  $10,645,035 


SPECIAL  REVENUE  COMMISSION  315 

INCREASE  1914  TO  AVERAGE  1915-1919  Incl. 

Other  All 

Output          Mining  Mining 

Property  Property 
Grant  County: 

Chino  Copper  Co 9.613,063    $  2,124,153  $11,737,213 

85  Mining  Co ,         282,498             74,010  356,508 

Empire  Zinc  Co 243,347           221,308  464,655 

Phelps  Dodge  Corp 1,147,378           983,129  2,130,&07 

Total  County 11,286,286        3,504,406  14,790,692 

Socorro  County: 

Ozark  S.  &  R.  Co 256,956   Dec    33,889  223,067 

Empire  Zinc  Co - 74,485               8,514  82,999 

MogoUon  Mines  Co 63,155           161,821  224,976 

Socorro  M.  &  M.  Co 85,369    Dec.  85,284  85 

Total  Precious   Mineral  11,766,251        3,555,569  15,321,820 

Carthage  Fuel  Co 5,795             13,817  19,612 

Total  County 485,760             64,980  550,740 


McKinley  County: 

Diamond  Coal  Co 70,452  31,262  101,714 

Gallup  S.  W.  Coal  Co _ 29,180  2,893  32,073 

Gallup  Amer.  Coal  Co.  (Victor) 15,943  98,421  11064 

Total  County 115,575  132,501  248,076 


Colfax  County: 

St.  Louis  R.  M.  &  Pac.  Co 512,966  1,045,351  1,558,317 

Stag  Canon  Fuel  Co.„ 545,339  560,848  991,823 

Total  County 

1,058,305  1,606,200  2,664,505 

Total  Coal  ■ 

1.179.675  1,752,518  £.932,193 

GRAND  TOTAL 12,945,926  $5,308,087  $18,254,013 


316  REPORT  OF  THE  NEW  MEXICO 

APPENDIX   XXXVII. 

RECEIPTS  FOR  STATE  FUNDS  SHOWN  BY  SOURCES 

(For  the  Seventh  Fiscal  Year  Ending  Nov.  30,  1919) 

Taxes — General  Property  1917  and  prior $    110,731.12 

Taxes— General  Property  1918  1,629,011.94 

Taxes— Cattle    Indemnity    73,700.04 

Taxes — Sheep  Sanitary  , 50,939.78 

Taxes — Disease  Eradication  1,943.18 

Fines  and  Penalties — Current  School 18,918.94 

Commissioner  of  Public  Lands — 

Income    $767,367.99 

Permanent 213,770.83 

Saline   1,778.94 

Escheats 1,167.97 

Sinking '■ - 531.32 

Interest , 5,912.61 

Maintenance  Public  Lands  174,048.82      $1,164,578.48 

Interest  Permanent  Fund  Invest  - 50,935.75 

Interest  on  Delinquent  Taxes 39,739.94 

Secretary  of  State  3,449.51 

Series  "B"  Int.  and  sink,  Santa  Fe  Co 15,000.00 

Int.   on   Bank   Deposits — Treasurer   45,977.45 

Treasurer's  Fees — Insurance  16.00 

Treasurer  United  States — 

Agricultural  College $  50,000.00 

5%  U.  S.  Land  Sales  CS  1,496.98 

10%  and  25%  U.  S.  Forest  Res 104,752.54 

State  Roads 39,739.21 

Vocational    Education   1,879.46 

State  Board  of  Health  3,558.70  201,426.89 

State   Engineer  ..„ 3,104.37 

Sale   Certificates   Indebtedness 95,000.00 

Premium  and   Interest  Accrued  , 2,459.98 

Council  of   Defense  38,872.26 

Superintendent  Penitentiary  26,298.14 

State  Engineer  and  State  Highway  Engineer - 332.219.83 

Auto  Licenses 62,671.39 

Levy  Road  Emergency  7,361.83 

Fines  - 25.00 

Corporation  Commission  Fees  '..., 30,528.60 

Attorney  General  Interest — Contingent  8.68 

Bank  Examiner  Fees  2,096.97 


SPECIAL  REVENUE  COMMISSION  317 

Clerk  Supreme  Court  1,983.30 

State  Treasurer  Refund 13.94 

District  Attorney— Counties  29,121.80 

Refund — Governor — Contingent  69.58 

Supt.  Insurance — Taxes 55,241.53 

Game  Warden  31,990.02 

Supt.  Penitentiary — Refund  Brick  Mach 65.00 

County  Treasurers — Tax  Commission  15,351.31 

Sale  Certificates  Ind. — Highway  Debentures  500,000.00 

Premium  and  Interest  Accrued   8,183.34 

Franchise  Tax — Corporations  18,120.00 

Ladies'  Relief  Society— Refund  79.76 

Cary  Act — Land  Board 41.00 

State  Board  Medical  Examiners  1,296.50 


$4,671,573.14 


318 


REPORT  OF  THE  NEW  MEXICO 


APPENDIX    XXXVIII. 
TOTAL  POPULATION  AND  SCHOOL  CENSUS. 


Whole 
1920 
Census 

Bernalillo    29,855 

Chaves 12,104 

Colfax   21,550 

Curry   11,236 

De  Baca  3,196 

Dona  Ana   16.046 

Eddy   9,116 

Grant  21,939 

Guadalupe    8,015 

Hidalgo  4,338 

Lea 3,545 

Lincoln  7,823 

Luna   12,270 

McKinley  14,125 

Mora    13,915 

Otero  7,902 

Quay   10,444 

RSo  Arriba 19,552 

Roosevelt 6,548 

Sandoval    8,863 

San  Juan  ^ 8,333 

San  Miguel  22,867 

Santa  Fe  15,030 

Sierra    4,620 

Socorro  14,036 

Taos  :.,  12,773 

Torrance  9,731 

Union  16,680 

Valencia  13,795 

Totals  360,247 


School 

Per  Cent 

No.  Chil 

1919 

School  Census 

for  eacl 

Census 

of  Total 

of  Cens 

11,768 

39.42 

3.94 

3,919 

32.38 

3.24 

6,821 

31.65 

3.17 

3,559 

31.68 

3.17 

1,198. 

37.49 

3.75 

5.334 

33.24 

3.32 

3,184 

34.93 

3.49 

6,558 

30.00 

3.00 

3,038      • 

37.90 

3.79 

1.161 

26.76 

2.68 

1,682 

47.45 

4.75 

2,820 

36.05 

3.61 

2,499 

20.37 

2.04 

2,787 

19.73 

1.97 

4,728 

33.98 

3.40 

2,752 

34.83 

3.48 

3,427 

32.81 

3.28 

6,405 

32.76 

3.28 

2,605 

39.78 

3.98 

2,120 

23.92 

2.39 

1,787 

21.44 

2.14 

8,845 

38.68 

3.87 

8,648 

57.54 

5.75 

1,468 

31.78 

3.18 

5,331 

37.99 

3.80 

4,343 

34.00 

3.40 

3,298 

36.05 

3.61 

5,983 

35.87 

3.59 

3,766 

27.47 

2.75 

121,834 


33.82 


3.38 


SPECIAL  REVENUE  COMMISSION 


319 


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UNIVERSITY  OF  CALIFORNIA  LIBRARY 

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